In the 16th century, the Anglo-Scottish borderlands were an absolute mess. Each side of the border loved to perform an act called "reiving," which included raiding, arson, kidnapping, murder, and extortion. When both sides committed this act of reiving, both sides received low payoffs. When one side was peaceful, but the other side committed the act of reiving, the peaceful side received negative payoffs, and the violent side received immense payoffs. Of course, both sides wanted to have high payoffs, so they performed the act of reiving. Here, performing the act of reiving is the dominant strategy; it is the only strategy that can yield the highest payoff. However, because the dominant-strategy equilibrium is Pareto-inefficient (both sides get lower payoffs when they reive each other), the situation in the Anglo-Scottish borderlands can be modeled by a prisoner's dilemma.
How did they get out of this prisoner's dilemma? The answer: through a decentralized system of cross-border criminal law called the
Leges Marchiarum. The law gave incentives on both sides to act peaceably rather than violently. Because the law was enforced by both sides, both sides got to the socially optimal equilibrium in the prisoner's dilemma. What is unique in this
paper, however, is that it shows that self-governance can facilitate order between members of different social groups. There is no direct intervention by a third party.
No comments:
Post a Comment