A fair solution to the compensation problem
AbstractWe study equity in economies where agents are endowed with different, non transferable, personal talents. To compensate them for such differences a given amount of money needs to be shared among them. We axiomatize a family of social orderings over allocations based on efficiency, fairness and robustness properties. Taking into account incentive constraints we derive the optimal policy: individuals with the same talent need to be equally compensated and only people whose level of talent is below a certain threshold should receive a positive compensation.
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Bibliographic InfoArticle provided by Springer in its journal Social Choice and Welfare.
Volume (Year): 32 (2009)
Issue (Month): 3 (March)
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Web page: http://link.springer.de/link/service/journals/00355/index.htm
Other versions of this item:
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
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- CALO-BLANCO, Aitor, 2012. "The compensation problem with fresh starts," CORE Discussion Papers 2012036, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- CALO-BLANCO, Aitor, 2012. "Responsibility, freedom, and forgiveness in health care," CORE Discussion Papers 2012004, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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