Post Scriptum on Relative and Absolute Gains
Post Scriptum on Relative and Absolute Gains

Summary/Abstract: The article offers a new perspective on the problem of relative and absolute gains that evolved into the important debate between neorealism and neoliberalism in the late 1980s and the early 1990s. The proposed reformulation of relative gains computation and of the utility function enables a proper differentiation between various distributions of capabilities. Then, as the second step, I fill the unfortunate gap of the unformalized relative gains sensitivity coefficient that was skipped in the original debate. Power position vis-à-vis the interacting partner and power position vis-à-vis the system are two variables that help formalize neorealist assumptions about the coefficient’s variance. This makes it possible to determine when exactly relative gains matter. The final part shows that payoffs symmetry, as a usual a priori condition employed in agent-based models and questioned by neorealists during the debate, is actually an accurate generalization of gains distribution patterns that ensue from the formalization of the neorealist argument itself.

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