Sunday, April 25, 2010

rent-seeking cycles

I wonder to what extent loss-aversion causes wars and other conflict. In times of growth, there seems to be relatively less in the way of attempts at rent-seeking, but when things grow scarce — not in any uniform absolute sense, but compared to where they were before — the rent-seeking picks up. For any given agent, it seems to me that whether rent-seeking is optimal is likely to be independent of whether the resources available from productive activity are growing or shrinking, at least supposing the rents to be sought are likely to be growing or shrinking at the same time.

It could be heterogeneity; perhaps the people whose fortunes are suffering the most are the ones doing the rent-seeking. Given that and incomplete information, perhaps people take the growth or recession of their own fortunes over periods of time as informative of their relative position; if everyone's fortunes become dimmer, but everyone only knows that their own fortunes are dimmer, they try to plunder their neighbors' fortunes, not knowing that they, too, have been shrinking.

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