Decisiveness and the Viability of Anarchy

Abstract

This paper explores how the viability of anarchy depends on the decisiveness parameter that determines the marginal effect of allocating a resource to an appropriative competition. In a one-factor model in which agents use in the appropriative competition the same resource that they are competing to appropriate, anarchy appears to be fragile, because in this model equilibrium consumption would be adequate for the viability of anarchy only if the decisiveness parameter were small. But, we show that this analysis is not robust. Specifically, we find that in a more credible model, in which the resource that agents compete to appropriate and the resource that agents use in the appropriative competition are distinct, anarchy is viable even if the decisiveness parameter is large.

Keywords: Anarchy, Appropriative Competition, Decisiveness

JEL Classification: D74, D23