Religious Institutions and the Creation of Economic Societies
University of Navarra, IESE Business School
July 20, 2013
This paper studies an anarchic society with a production technology where the allocation of goods is governed by strength. I establish the following results. First, the anarchic society is inefficient as no widespread adoption of the production technology occurs. Second, wide-scale production, and thus efficiency, is generally not achievable through a punishment mechanism that requires punishers to be stronger than the to be punished. Third, efficiency can be enforced on the other hand through a religious system with a supernatural punishment mechanism if it is sufficiently credible. This paper makes a new point regarding the crucial role that religious institutions with a doctrine of salvation and damnation could play in the transition from anarchic societies to those with enforceable property rights that enable production and subsequent economic development.
Number of Pages in PDF File: 42
Keywords: Property Rights, Anarchy, Supernatural Punishment, Religion, Religious Beliefs, Institutions, Neolithic Revolution, Partition Function Form Games, Dynamci Equilibrium
Date posted: October 11, 2010 ; Last revised: July 27, 2013