Anarchy in the laboratory (and the role of the state)

A recent literature on the economics of conflict provides conditions under which groups of individuals divide up between “producers” and “predators” - an “anarchic” equilibrium - as well as conditions under which a government agent is empowered to make collective action choices that can completely deter predation. We test these theoretical predictions in a laboratory experiment. In the absence of a government agent, groups of subjects choose actions consistent with the anarchic equilibrium. The introduction of a government agent, charged with maximizing the consumption of producers, enables subjects to achieve nearly perfect coordination on the Pareto superior equilibrium where all individuals choose to be producers.