Parable of the Dammed

Word goes out of the strange practices, the two families pouring all their resources into a competition of great dams and flood-walls. Travellers passing through town stare in bemusement, and wonder what strange force would lead the families to waste so much resources on a minor stream through the woods.

Both families are conquered by an outside force. Stripped of their land in all but name, the natives continue to build dams and flood-walls to attract tourists, but their hearts are no longer in it.

So for some realism which the original story didn't call for —it's a "parable trying to make a point", not a "detailed historical account of territorial feuds in 15th century Albania"—, we can look at how this works out in practice. To do this, we look to The Kanun of Lekë Dukagjini, which describes the sort of laws used to deal with this kind of thing in 15th century Albania. My details might be iffy here, but I did read the book and remember some parts.

In practice, there are several points of intervention, if I'm remembering correctly:

• After the first murder, the extended family of the murdered goes after the murderer, to the extent that he can't safely go out of his home. If he is killed, the feud ends on the part of the murdered's family.
• At any point, one of the families can ask a more powerful figure to mediate; in some regions this can be a cleric. The resolution might involve substantial amounts of money to be paid, which, crucially, is set beforehand by law, in excruciating detail depending on the conditions.
• The lands wouldn't in fact be the most valuable resource here; it would be the working power of adult men, who can't get out because they would be killed in revenge. This cripples both families economically, so they do have an incentive to cooperate.

So, in practice

a clever couple from one of the families hatched an idea

I get the impression that this ends with the clever couple getting killed in the middle of the night by one of the more violent and impulsive cousins of the second family, and maybe the second family paying some reparations if they're caught. Probably less than, you know, if they'd killed a normal couple. That, or the dam gets destroyed. Or actually, the husband from the clever couple would have to ask the Patriarch of the family for permission, who would veto the idea because he wants to make the truce work, and is hesitant to lose more of his sons to a new feud. Also, with or without the discount factor rural people in Albania have, doing this kind of thing wouldn't be worth it. Or actually, the clever couple learnt in childhood that this kind of thing wasn't worth it, and got some lashes in the process. 

Violence escalates, and the feud breaks out anew - but peace is even harder to come by, now, since the river has been permanently destroyed as a Schelling point.

The Schelling point wasn't the river, the Schelling point was someone more powerful than you telling you not to start trouble. This is harder to game. Also, you don't have "the government", you have "the more powerful village cacique," or the priest, which works because you don't want to hell when you die. 

You do see a thing in rural Spain with territory boundaries being marked by stones, and those stones being moved, which kind of works if one side doesn't spend time in the land.

I'm here for the parables and the pun titles. Thanks for providing me a little of Scott Alexander during the SSC drought.

Related: if you spend most all of your time feeling miserable for complicated reasons consider that you've had a campaign of memetic maneuver warfare successfully staged against you. Run an audit of who is living rent free inside your head. The following sentence stem can be illustrative: The bad thing that would happen if I stopped believing [X] is...

This won't catch everything as more complicated beliefs have a net of justifications. But it will catch low hanging fruit.

Seems very consistent with views of rent-seeking as a negative-sum game.

Seems inconsistent with the Coase Theorem, and perhaps why, at least moderately impartial, third parties are better suited to mediating disputes than those directly involved. But when talking about politics and government where to find such an impartial 3rd party?

The parable shows a few things that IMO are more important than the things you mention:

1. Disputes are not necessarily resolved when the first agreement is reached.  If the border was important enough to fight over, it should be important enough to fight again when one side tries to move it (or when it passes some threshold.  This is a problem in the real world, too - https://en.wikipedia.org/wiki/Border_irregularities_of_the_United_States has a number of examples of rivers that move, and the borders sometimes move and sometimes don't, but either choice requires discussion and agreement.
2. Schelling points/lines are useful for identifying candidates for agreement, but they're not enforcement mechanisms.  There must be some underlying reality that the agreement is about.

While I intuitively agree with the first takeaway (that moving Schelling points is usually expensive), I think that politics do not have to be a zero sum game. Look at EU or at coalitions creating governments within one country (you US citizens do not have that, I realize). Anyhow, I think that logical resolution would be to punish the cheating family with war as in reiterated prisoners dilemma.  

In a fourth eventuality the opposed family notices the couple's flagrant breach of the peace agreement and induces a third party to intervene and render their opinion on whether hostile dam-building is a violation of property dispute norms. The third party arbitrator sees an opportunity to grow fat from the conflict and continually requests ever larger bribes from both sides before eventually drawing an arbitrary line in the ground and calling it a border. Of course the border isn't amenable to either family, but they are powerless to challenge the will of the arbitrator because that would post facto make their bribes a waste and not improve their situation one bit. The arbitrator realizes there is a lot of free slack to be gobbled up in these property disputes and starts up his own racket.

Moral: don't trust anybody to be fair to anybody but themselves.

Have you read Ursula K. LeGuin's book "Changing Planes" by any chance? If I recall correctly, there's a chapter where the viewpoint character is visiting a library, and reads a legend about two rival cities with a river border, and the outcome is rather similar.

I like this story, and I think you could do a second version in which you just tell the story, without any analysis incorporated. I think that some people who might be confused or turned off by the analysis because they're unfamiliar with the jargon might learn more from just reading the story itself.

Pull the rope sideways - not the river ;)

Great post!

I like the story as illustrating inefficient fighting over resources and entitlements. However, I am not sure your interpretation of moving focal (or Schelling) points works?

In general, a focal point is needed when you have to choose something without being able to explicitly coordinate on it (and when there are multiple equilibria). Here the families do coordinate - they negotiate. As a fairness norm, I'd guess that choosing the middle of the river works because the river "ran roughly through the middle of their territories". When one conflict party afterwards manipulates the river, the river becomes useless as a border, and trust is destroyed (ending 1), or one conflict party just does not notice what happened and seemingly has limited attention or limited information (ending 2), or the destruction of trust again leads to wasteful fighting (ending 3). Endings 1 and 3 can be interpreted as the "bad" Nash equilibrium of a repeated game. Standard game theory does not offer convincing solutions for why one of the possible equilibria (cooperate or don't) is chosen, so focal points may be part of the answer, but then the river is not the focal point; rather, "cooperation" is the focal point.  

Since the parties agreed to use the middle of the river as the border and then one of the parties had the idea to manipulate it, the story may illustrate a problem of incomplete contracts.