The Emergence and Collopse of the State: A Game Theoretic Analysis with Computer Simulations

This paper describes how a state emerges and collapses that makes it possible for citizens to do something which they will not voluntarily. The model is the generalisation of Okada and Sakakibara (1991): people may may voluntarily make a state, or a compulsory rule that force themselves to construct and maintain the public capital stock. The novelty of this paper lies in the assumption that productivity and benefit from the stock may differ from person to person. This paper presents both game theoretic analysis and results of simulations, which suggest that selfish but rational people may agree to make a state, which grows as the public capital stock accumulates but collapses when the stock reaches a certain level.