On Norms and Coordination Games: A Rent–Seeking Approach

The aim of this paper is to extend the rent-seeking literature to the equilibrium selection problem in competitive coordination games, i.e., games in which more than one equilibrium exists, and individuals' preferences are opposed. We analyze alternative correlated equilibria: contractual agree...

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Bibliographic Details
Published in:Constitutional political economy 2001-09, Vol.12 (3), p.237-253
Main Authors: Casas–Pardo, José, Montoro–Pons, Juan
Format: Article
Language:English
Subjects:
Collective action
Decision making
Economics
Game theory
Political economy
Public goods
Rent-seeking
Studies
Two-person games
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Summary:The aim of this paper is to extend the rent-seeking literature to the equilibrium selection problem in competitive coordination games, i.e., games in which more than one equilibrium exists, and individuals' preferences are opposed. We analyze alternative correlated equilibria: contractual agreements and legally enforced equilibria. The latter are to be understood as the outcome of rents-seeking contests in which players invest resources in order to set a norm. The contest is analyzed in its basic two-person setting and later generalized to the two-populations case. There we show that the outcomes depend on the relative payoff structure of the game, the technological properties of the contest, and the population distribution. Finally, the efficiency analysis focuses not only on the extent of the rent dissipation, but also on the comparative analysis of the inefficiencies that arise in the market (not coordinated) equilibrium. [PUBLICATION ABSTRACT]
ISSN:1043-4062
1572-9966
DOI:10.1023/A:1011659911824