IDEAS home Printed from https://ideas.repec.org/p/geo/guwopa/gueconwpa~23-23-06.html
   My bibliography  Save this paper

The Emergence of Enforcement

Author

Abstract

How do mechanisms that enforce cooperation emerge in a society where none are available and agents are endowed with raw power, that allows a more powerful agent to expropriate a less powerful one? We study a model where expropriation is costly and agents can choose whether to engage in surplus-augmenting cooperation or engage in expropriation. While in bilateral relations, if cooperation is not overwhelmingly productive and expropriation is not too costly, the latter will prevent cooperation, when there are three or more agents, powerful ones can become enforcers of cooperation for agents ranked below them. In equilibrium they will expropriate smaller amounts from multiple weaker cooperating agents who in turn will not deviate for fear of being expropriated more heavily because of their larger expropriation proceeds. Surprisingly, the details of the power structure are irrelevant for the existence of equilibria with enforcement provided that enough agents are present and one is ranked above all others. These details are instead key to the existence of other highly non-cooperative equilibria that obtain in certain cases.

Suggested Citation

  • Luca Anderlini & Leonardo Felli & Michele Piccione, 2023. "The Emergence of Enforcement," Working Papers gueconwpa~23-23-06, Georgetown University, Department of Economics.
    • Handle: RePEc:geo:guwopa:gueconwpa~23-23-06
    as

    Download full text from publisher

    File URL: http://www.felli.info/papers/AFP_Stealing_WP.pdf
    File Function: Full text
    Download Restriction: None
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mayshar, Joram & Moav, Omer & Neeman, Zvika, 2017. "Geography, Transparency, and Institutions," American Political Science Review, Cambridge University Press, vol. 111(3), pages 622-636, August.
    2. Joram Mayshar & Omer Moav & Luigi Pascali, 2022. "The Origin of the State: Land Productivity or Appropriability?," Journal of Political Economy, University of Chicago Press, vol. 130(4), pages 1091-1144.
    3. Oriana Bandiera, 2003. "Land Reform, the Market for Protection, and the Origins of the Sicilian Mafia: Theory and Evidence," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 19(1), pages 218-244, April.
    4. Moselle, Boaz & Polak, Benjamin, 2001. "A Model of a Predatory State," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 17(1), pages 1-33, April.
    5. Hirshleifer, Jack, 1995. "Anarchy and Its Breakdown," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 26-52, February.
    6. Shapley, Lloyd S & Shubik, Martin, 1977. "Trade Using One Commodity as a Means of Payment," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 937-968, October.
    7. Daron Acemoglu & Simon Johnson, 2005. "Unbundling Institutions," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 949-995, October.
    8. Rubinstein, Ariel & Yildiz, Kemal, 2022. "Equilibrium in a civilized jungle," Theoretical Economics, Econometric Society, vol. 17(3), July.
    9. Starr, Ross M., 2008. "Commodity money equilibrium in a convex trading post economy with transaction costs," Journal of Mathematical Economics, Elsevier, vol. 44(12), pages 1413-1427, December.
    10. Daron Acemoglu & Alexander Wolitzky, 2020. "Sustaining Cooperation: Community Enforcement versus Specialized Enforcement," Journal of the European Economic Association, European Economic Association, vol. 18(2), pages 1078-1122.
    11. Frank Hahn, 1973. "On Transaction Costs, Inessential Sequence Economies and Money," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(4), pages 449-461.
    12. Avinash Dixit, 2003. "On Modes of Economic Governance," Econometrica, Econometric Society, vol. 71(2), pages 449-481, March.
    13. Giacomo Calzolari & Leonardo Felli & Johannes Koenen & Giancarlo Spagnolo & Konrad O. Stahl, 2021. "Relational Contracts and Trust in a High-Tech Industry," CRC TR 224 Discussion Paper Series crctr224_2021_316, University of Bonn and University of Mannheim, Germany.
    14. Mailath, George J. & Samuelson, Larry, 2006. "Repeated Games and Reputations: Long-Run Relationships," OUP Catalogue, Oxford University Press, number 9780195300796.
    15. Piccione, Michele & Rubinstein, Ariel, 2004. "The curse of wealth and power," Journal of Economic Theory, Elsevier, vol. 117(1), pages 119-123, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Caitlin Brown & Martin Ravallion, 2023. "Inequality and Social Distancing during the Pandemic," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(3), pages 679-702, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thiemo Fetzer & Samuel Marden, 2017. "Take What You Can: Property Rights, Contestability and Conflict," Economic Journal, Royal Economic Society, vol. 0(601), pages 757-783, May.
    2. Verdier, Thierry, 2010. "Ouverture, conflits et capacité étatique : une perspective d’économie politique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 86(4), pages 415-449, décembre.
    3. Thiemo Fetzer & Samuel Marden, 2016. "Take what you can: property rights, contestability and conflict," Working Paper Series 9216, Department of Economics, University of Sussex.
    4. Anna Rubinchik & Roberto Samaniego, 2013. "Demand for contract enforcement in a barter environment," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(1), pages 73-97, June.
    5. Russell S. Sobel & Brian J. Osoba, 2009. "Youth Gangs as Pseudo-Governments Implications for Violent Crime," Southern Economic Journal, John Wiley & Sons, vol. 75(4), pages 996-1018, April.
    6. Russell S. Sobel & Brian J. Osoba, 2009. "Youth Gangs as Pseudo-Governments Implications for Violent Crime," Southern Economic Journal, Southern Economic Association, vol. 75(4), pages 996-1018, April.
    7. Russell S. Sobel & Brian J. Osoba, 2009. "Youth Gangs as Pseudo‐Governments: Implications for Violent Crime," Southern Economic Journal, John Wiley & Sons, vol. 75(4), pages 996-1018, April.
    8. Daron Acemoglu & Alexander Wolitzky, 2015. "Sustaining Cooperation: Community Enforcement vs. Specialized Enforcement," NBER Working Papers 21457, National Bureau of Economic Research, Inc.
    9. Wu, Steven Y. & Roe, Brian E., 2007. "Discretionary Latitude and Relational Contracting," IZA Discussion Papers 2879, Institute of Labor Economics (IZA).
    10. Timothy Besley & Torsten Persson, 2011. "Pillars of Prosperity: The Political Economics of Development Clusters," Economics Books, Princeton University Press, edition 1, number 9624.
    11. Alberto Alesina & Salvatore Piccolo & Paolo Pinotti, 2019. "Organized Crime, Violence, and Politics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(2), pages 457-499.
    12. Rui Wang & Qianmao Zhu & Matthew Noellert, 2024. "Weak central government, strong legal rights: the origins of divergent legal institutions in 18th-century Chinese and Japanese rice markets," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    13. James M. Malcomson, 2012. "Relational Incentive Contracts [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    14. Grossman, Herschel I., 2002. ""Make us a king": anarchy, predation, and the state," European Journal of Political Economy, Elsevier, vol. 18(1), pages 31-46, March.
    15. Besley, Timothy & Ghatak, Maitreesh, 2010. "Property Rights and Economic Development," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4525-4595, Elsevier.
    16. Jan U. Auerbach & Costas Azariadis, 2015. "Property Rights, Governance, and Economic Development," Review of Development Economics, Wiley Blackwell, vol. 19(2), pages 210-220, May.
    17. Kai Konrad & Stergios Skaperdas, 2012. "The market for protection and the origin of the state," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(2), pages 417-443, June.
    18. Shami, Labib, 2019. "Dynamic monetary equilibrium with a Non-Observed Economy and Shapley and Shubik’s price mechanism," Journal of Macroeconomics, Elsevier, vol. 62(C).
    19. Francesco Angelini & Guido Candela & Massimiliano Castellani, 2020. "Governance efficiency with and without government," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 54(1), pages 183-200, January.
    20. Antony W. Dnes & Nuno Garoupa, 2010. "Behavior, Human Capital and the Formation of Gangs," Kyklos, Wiley Blackwell, vol. 63(4), pages 517-529, November.

    More about this item

    Keywords

    Jungle; Power Structures; Enforcement; Rule of Law;
    All these keywords.

    JEL classification:

    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • D00 - Microeconomics - - General - - - General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • K19 - Law and Economics - - Basic Areas of Law - - - Other
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • K49 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Other

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:geo:guwopa:gueconwpa~23-23-06. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marcia Suss (email available below). General contact details of provider: http://econ.georgetown.edu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.