Justice, Institutions, and Multiple Equilibria

Abstract

Schelling's concept of the focal-point effect in games with multiple equilibria is among the most important ideas in social theory. When justice is recognized as a criterion for identifying focal equilibria, we see how justice can affect the rational behavior of selfish economic actors. The foundations of political institutions can be understood in terms of focal equilibrium selection in a more fundamental game. This paper probes these ideas with some simple game-theoretic examples. Multiple equilibria are analyzed in a rival-claimants game, and this coordination game is extended to simple models of property rights, political institutions, boundaries, and economic investment.

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