The Breakdown of Co-operation in Paradise: The Rise of Anarchy

Sigmund A. Wagner-Tsukamoto

Chapter 4 in The Economics of Paradise, 2015, pp 99-119 from Palgrave Macmillan

Abstract: Abstract The previous chapters looked at the contested nature and types of capital in the Paradise story, and how the agents of the story seemingly behaved as self-interested agents. In the following I analyse in finer detail how self-interested agents became involved in interaction conflict over capital arrangements, and how, in turn, this gave rise to a condition that Buchanan’s constitutional economics may term ‘destructive anarchy’ or Williamson’s institutional economics ‘the contracting dilemma’. Buchanan is explicit: In the strict two-person interaction, enforcement is implemented through the continued threat of having the whole system plunged back into anarchy by any one of the two participants. (Buchanan 1975: 79) Critical biblical research has arrived at comparable insights: Genesis 2–3 in a very subtle and skilful way changes into a ‘corruption story’, and the final state of affairs … reflects … a [partial] return to Chaos. (Slivniak 2003: 455) I contextualize this rise of the anarchic condition through economic interaction theory, which is drawn upon explicitly or implicitly in much institutional and constitutional economics. Specifically, I apply principal-agent theory in this chapter.

Keywords: Moral Hazard; Agent Theory; Agency Problem; Information Problem; Agent Relationship (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-28770-0_6

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DOI: 10.1057/9781137287700_6

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