Equilibrium Conditions for Catch-22 Situations

This is a paper in the ``economists ruin everything'' field. It considers whether Catch-22 situations can persist as an equilibrium phenomenon. Rather than being an arbitrary rule or a set of self-serving beliefs, the focus is on the preferences of Gatekeepers who choose to create such situations in the first place. The base game-theoretic model is of a Catch-22 situation inspired by Heller's famous paradox. We consider a Requester who may be Sane or Insane and a Gatekeeper who must decide whether to grant the Requester's desired outcome or force them into a less desirable one. This is modelled as a game in which the Requester chooses whether to send a request signal before the Gatekeeper decides. We solve for the conditions under which a Catch-22 situation persists as an equilibrium and its efficiency properties. It is demonstrated that Catch-22 situations can arise, but they reflect an efficient response on the part of a Gatekeeper facing asymmetric information. An application to labour markets is also considered