ON THE RATIONALITY OF MUTUALLY IMMISERATING COERCION

The pursuit of relative advantage in a setting where one person has po wer over another may yield perfectly rational decisions by the person in power which reduce the wealth of all affected parties, including th e person in power. This contrasts with decisions by independent egoist ic decision makers who, in a similar circumstances, will not pursue tr ansfers when they are known to cost more to obtain than would be reali zed. Utility functions that include relative wealth or position as arg uments have the property that utility increases as relative wealth inc reases. Consequently mutually immiserating policies may be rationally undertaken if they yield sufficient relative advantage to offset absol ute wealth reductions.