The Coase Experiment

Diary Entry: October 1, 2024

My head is spinning. I just finished reading Ronald Coase’s article, “The Problem of Social Cost.” It’s one of the most famous and influential pieces in all of law and economics, and it’s got me thinking about something completely unrelated. Coase argues that certain “bad” things, like pollution, aren’t the fault of just one party. It’s a mutual problem, and if the parties can bargain without cost, they’ll find the most efficient solution, no matter who's technically “at fault.”

This idea, that you can solve problems by looking at the total cost and allowing for some bargaining, got me thinking. What if you applied that same cold, rational economic logic to something as morally absolute as murder? What if, instead of viewing every single killing as a per se bad, you saw it as a “social cost” that could be managed to reduce the overall number of killings in a society?

This is where my mind went to an almost unbelievable experiment that supposedly happened in Cambodia. I’ve heard stories about a general who, inspired by modern theories, tried to build a new nation from the ground up. And he started with a twisted social experiment, a living, breathing paradox designed to test if Coase’s ideas could work on the most extreme human externality: murder.

***

The dust settled in a slow-motion curtain of golden light, illuminating the 333 of us arranged in a perfect, concentric circle. We stood in a clearing surrounded by the low, murmuring hum of the Cambodian jungle, a sound that was at once tranquil and deeply unsettling. I was in the third ring, close enough to the center to see the subtle twitch of the man’s eye across from me, but far enough that the faces of the people on the outer rings were just blurs of fear and exhaustion. The air was thick with it — the fear, the heat, and the unspoken certainty that this would end exactly like the last 666 experiments.

That was the legend of the circle, whispered from one weary participant to the next: that General Hastum, the architect of this mad theater, had run this experiment 666 times. And 666 times, it had ended in a bloodbath.

A hush fell as General Hastum, a gaunt man in a French military uniform, strode to the center of the innermost circle. His face was a mask of intellectual curiosity and disinterest. He spoke into a loudspeaker, his voice echoing across the clearing. “Welcome to Experiment №667,” he announced. “The rules are simple. One rule, in fact: Do not kill each other. The goal, as always, is to have a winner. If the experiment ends without an assassination, all participants are declared winners. If there is an assassination, only the last survivor will receive the prize.”

The “prize” was a myth whispered among the exhausted participants — a promise of wealth and freedom, a chance to escape this intellectual hell. But no one had ever won it, not for long.

Hastum continued, his voice as dry as the dust we stood in. “To encourage cooperation, groups may form. You may choose a leader. If your group survives, your leader will be declared the winner, and you will share in the spoils. This is a perfect system,” he said, a note of triumph in his voice. “In it, a rational actor always finds a path to victory.”

He looked around, his cold eyes sweeping over us as if we were just data points in his grand theory. His voice dropped. “I will tell you what has happened in the previous 666 experiments. The first killing is inevitable. After that, war is inevitable. The groups form, and they either kill or are killed. There is always a winner.”

His words were a gut punch, confirming our worst fears. We were not participants; we were just the next iteration of a failed experiment. Hastum walked away, his mission completed.

The silence that followed was suffocating. We were left with ourselves, with the heat, and with the terrifying knowledge that it would only take one person to start the cascade. A man in the second ring, a tall, nervous man with sweat beading on his forehead, nervously glanced at the man next to him. His hands balled into fists. The fear was a palpable thing, a predator circling in the still air. I could almost hear the thoughts: Will he kill me? Should I kill him first?

This was the moment. The same moment as in all the experiments before. The moment when someone, out of fear or greed, would make the first move. The first act of violence was always the catalyst. It was the moment that the rational choice of self-preservation gave way to the irrational panic of the group, and chaos took over.

But then, a voice, a quiet one from the innermost circle, cut through the tension. It was a young woman, no more than twenty, with a calm in her eyes that was in stark contrast to the fear in everyone else’s.

“We won’t do it,” she said, her voice clear and strong.

Her simple words seemed to echo in the stillness. A man from the outer circle scoffed. “What won’t we do? Kill each other? Someone always does.”

“No,” she replied, her gaze fixed on the man. “Someone always kills because they are afraid of retaliation. Because they know that if they don’t strike first, they will be killed in revenge.”

She looked around at all of us, her eyes moving slowly from person to person. “We can break the cycle. The rule is that if there is an assassination, the last person left wins. What if we change the first part of that equation? What if we decide that if someone kills, there will be no retaliation?”

The idea hung in the air, a crazy notion that defied every instinct for self-preservation. A man in my circle, a large, intimidating figure, laughed. “You expect us to just let a killer walk free? That’s insane.”

“No,” she said, her voice unwavering. “I expect us to live. The General wants us to act like predators. He wants us to kill each other until only one is left. He wants to prove that his theories are correct, that in the end, we are all just animals looking out for ourselves. But we don’t have to play his game.”

She paused, letting her words sink in. “If one of us kills, we will do nothing. No revenge. No retribution. We will do nothing and just wait.”

The sheer audacity of the idea was staggering. To surrender the primal impulse for vengeance? To trust that your non-action would protect you? It was either the most brilliant plan or the most suicidal. The man in my ring who had laughed now looked at the woman with a dawning look of respect. Another person started to nod slowly. The idea, once spoken, began to take root in our minds. It was a new way to win. It was a new way to survive. And for the first time in what seemed like a very long time, the air in the circle was not thick with fear, but with a fragile sense of hope.