Authority and Social Assets

University Of Pennsylvania, Philadelphia PA

Investigators

Abstract

This project consists of two parts. The first part addresses the role of laws in changing people's behavior. Laws do not directly change agents' payoffs. With the standard equilibrium concepts, the role of laws is then one of coordination. Different people or groups have differing abilities to coordinate effectively, and any given person will not be able to coordinate equally well in all situations. A person or group has "authority" in a particular situation if there is an equilibrium in which they can coordinate behavior for that situation. We analyze the characteristics of people and of problems that allow authority in this sense to obtain. The second part continues previous work by the principle investigators incorporating social arrangements into economic models. Previous findings revealed that when there is some incompleteness in markets there will typically be an indeterminacy in outcomes, and that what might be called social arrangements arise because of this indeterminacy. In previous work, what might be called "social assets" played a role. Social assets are assets that are irrelevant from any productive standpoint, but have value in equilibria when particular social arrangements govern. The current research lays out a model in which social assets arise, and investigates the determinants of potential social assets.