Coalition Formation in the State-of-Nature

This paper is concerned with the origins of one of the most basic of property rights, namely, the right of an individual or an organization to the fruits of its labour. I study a model of the strategic interaction amongst three players in the state-of-nature, which is an environment characterized by the absence of any laws and institutions (including property rights and the state). The focus of my study is on the following question: Amongst which set of players (if any) will the said property right be established? Will it be established amongst all three players, or only between two of the three players (and if so, which two players)? Or will it not established at all, with all three players thus doomed to live without this property right? In addressing this question of “endogenous coalition formation” in the context of establishing secure property rights, I shall also explore the roles of the players’ fighting and productive skills on the equilibrium coalitional structure.