Kantian Optimization, Social Ethos, and Pareto Efficiency
AbstractAlthough evidence accrues in biology, anthropology and experimental economics that homo sapiens is a cooperative species, the reigning assumption in economic theory is that individuals optimize in an autarkic manner (as in Nash and Walrasian equilibrium). I here postulate an interdependent kind of optimizing behavior, called Kantian. It is shown that in simple economic models, when there are negative externalities (such as congestion effects from use of a commonly owned resource) or positive externalities (such as a social ethos reflected in individualsâ preferences), Kantian equilibria dominate Nash-Walras equilibria in terms of efficiency. While economists schooled in Nash equilibrium may view the Kantian behavior as utopian, there is some -- perhaps much -- evidence that it exists. If cultures evolve through group selection, the hypothesis that Kantian behavior is more prevalent than we may think is supported by the efficiency results here demonstrated.
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Bibliographic InfoPaper provided by David K. Levine in its series Levine's Working Paper Archive with number 786969000000000407.
Date of creation: 13 Apr 2012
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Other versions of this item:
- John E. Roemer, 2012. "Kantian Optimization, Social Ethos, and Pareto Efficiency," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1854, Cowles Foundation for Research in Economics, Yale University.
- D60 - Microeconomics - - Welfare Economics - - - General
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-23 (All new papers)
- NEP-HPE-2012-04-23 (History & Philosophy of Economics)
- NEP-MIC-2012-04-23 (Microeconomics)
- NEP-SOC-2012-04-23 (Social Norms & Social Capital)
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