Question
A major puzzle unexplained by existing contract theories is the stylized fact of share tenancy that output is almost universally shared between the tenant and
A major puzzle unexplained by existing contract theories is the stylized fact of share tenancy that output is almost universally shared between the tenant and the landlord at a 50:50 ratio . . . despite obvious differences in the relative contributions of land and labor to agricultural production among different production environments" (Otsuka, Chuma, and Hayami 1992:1969). There are one hunred and one strict Nash equilibria in the division game in which claims on a dollar must be denominated in pennies. Suppose members of a large population were randomly paired to play a series of one-shot division games, as described in the text. Show that equal division is the only ESS in pure strategies. Does this fact help explain why landlord-share-cropper shares tend to be fifty-fifty? Why or why not? Are there additional pure strategy equilibria in this case, that is, equilibria that make use of the farmer/landlord asymmetry?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started