Copyright
Michael Richter; Ariel Rubinstein;Published On
2024-11-13Page Range
pp. 13–36Language
- English
Print Length
24 pages
1. Equilibrium in the Jungle
The standard economic approach treats economic activity as voluntary: all involved parties do whatever they do of their own free will. However, life is not just a series of voluntary actions. An agent might use power to seize assets from others or to force others to do things against their will. Economic Theory typically ignores the use of power as a driver of social activity.
This chapter follows Piccione and Rubinstein (2007) which introduces a model of a society referred to as the jungle, in which economic transactions are governed only by coercion. The model consists of a set of agents with exogenous preferences over a set of assets and a power ordering of the agents. Power means that a stronger agent is able to take things away from a weaker agent without the weaker agent's consent.
A jungle equilibrium is a feasible allocation of the assets such that no agent wishes to take assets from an agent (or agents) weaker than himself. We will apply versions of the concept to the housing economy (Shapley and Scarf (1974)) and to the division economy. Throughout, we will deal with standard issues, such as: existence, uniqueness and the fundamental theorems of welfare.
Contributors
Michael Richter
(author)Michael Richter is a professor of Economics at Baruch College, City University of New York and Royal Holloway, University of London. He is a graduate of the University of Chicago (BS, Math) and New York University (PhD, Economics). His research interests are in microeconomic theory, particularly decision theory, general equilibrium, and search. He lives in New York, with his wife and two kids. For other works, the author’s website is: http://www.mrichter.co/
Ariel Rubinstein
(author)Ariel Rubinstein was born in Jerusalem and received his PhD from the Hebrew University in Jerusalem in 1979. Has been a Professor at the Hebrew University and at Princeton and currently is a Professor (Emeritus) at Tel Aviv University and a Professor of Economics at New York University. He has served as the President of the Econometric Society (2004). He is a foreign honorary member of the American Academy of Arts and Sciences and the American Economic Association, an Elected Fellow of the Israeli Academy of Sciences and Elected Corresponding Fellow of the British Academy. His 7 books reflect his research interests: Bargaining and Markets (with M. Osborne) (1990), A Course in Game Theory (with M. Osborne) (1994), Modeling Bounded Rationality (1998), Economics and Language (2000), Lecture Notes in Microeconomics (2005) and Models of Microeconomic Theory (with M.Osborne) (2020). His book Economic Fables (2012) presents his general views about Economic Theory. He created and manages the Atlas of Cafes (where one can think). All his books and articles are accessed through his homepage https://arielrubinstein.tau.ac.il