Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/107857
Authors: 
Houba, Harold
Luttens, Roland Iwan
Weikard, Hans-Peter
Year of Publication: 
2014
Series/Report no.: 
Tinbergen Institute Discussion Paper 14-144/II
Abstract: 
We include initial holdings in the jungle economy of Piccione and Rubinstein (Economic Journal, 2007) in which the unique equilibrium satisfies lexicographic welfare maximization. When we relax assumptions on consumption sets and preferences slightly, equilibria other than lexicographic welfare maximizers can be jungle equilibria. This result is due to myopia. We introduce the concept of farsightedness and show that farsighted jungle equilibria coincide with lexicographic welfare maximization. However, we also find farsighted equilibria that are Pareto inefficient since stronger agents may withhold goods from weaker agents. Here, gift giving by stronger agents is needed to achieve Pareto efficiency. We argue that even trade has a role in the jungle. Our results add to understanding coercion and the subtle role of gift giving and trade in an economy purely based on po wer relations.
Subjects: 
power
coercion
jungle economy
farsightedness
withholding
JEL: 
D51
D61
P52
Document Type: 
Working Paper

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