The Emergence of Enforcement

Luca Anderlini, Leonardo Felli and Michele Piccione

Journal of Law and Economics, 2026, vol. 69, issue 4, 755 - 788

Abstract: How do mechanisms that enforce cooperation emerge in a society in which some agents are endowed with raw power that allows them to expropriate less powerful ones? We study a model in which expropriation is costly, and agents can choose whether to engage in surplus-augmenting cooperation or expropriation. In bilateral relationships, if cooperation is not overwhelmingly productive and expropriation is not too costly, the latter will prevent cooperation, but when there are three or more agents, powerful ones can enforce cooperation for agents ranked below them. In equilibrium they will expropriate smaller amounts from multiple weaker cooperating agents who in turn will not deviate for fear of being expropriated more because of their larger expropriation proceeds. Surprisingly, the details of the power structure are irrelevant for the existence of equilibria with enforcement. These details are instead key to the existence of other highly noncooperative equilibria that obtain in certain cases.

Date: 2026
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