Article thumbnail

The dynamic transformation of political systems through social contract: a game theoretic approach

By Koichi Suga, Akira Okada and Kenichi Sakakibara


We consider how the political system of the state evolves in the process of economic development. We present a dynamic public goods economy with non-overlapping generations, which confronts the free-rider problem without the state. In each generation, individuals enter under the unanimous rule a social contract of the political system, either monarchy or democracy, and then attempt to establish the state under the contracted political system. If the state is established, it provides public goods by enforcing tax on its members. Our game theoretic analysis shows: (i) the state can be established if and only if social productivity in terms of the capital stock of public goods is lower than a critical level; (ii) individuals choose democracy if social productivity is sufficiently high, while monarchy may be chosen if it is not; (iii) social productivity stochastically converges to the critical level over generations; and (iv) a simulation result shows several transformation patterns of political systems.

OAI identifier:
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • (external link)
  • (external link)
  • Suggested articles

    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.