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Equality of Resources Revisited Using Induced Preferences

Author

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  • Arnsperger, Chistian

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES); Université catholique de Louvain, Chaire Hoover)

Abstract

This essay explores the link between Ronald Dworkin’s well-known concept of ‘equality of resources’ and the notion of an envy-free allocation in the context of an economy with production. In particular, I investigate a two-stage economy in which the first stage corresponds to Dworkin’s ‘competitive initial auction’, while the second stage corresponds to the operation of the actual (possibly noncompetitive) economy. The central claim of the essay is that there is a problem in interpreting equality of resources on the basis of existing results in the envy-freeness literature, especially results concerning the ‘competitive equilibrium from equal split’ (CEES). The problem comes from the fact that these results use the agents’ ‘direct’ preferences, whereas I argue that Dworkin’s concept can make sense only if one introduces a notion of ‘induced preferences for resources’. I study two criteria of envy-freeness based on induced preferences, and show that the difficulties arising in the implementation of these two criteria in CEES sheds considerable doubt on (i) the practicability of Dworkin’s own project and (ii) the validity of usual interpretation of equality of resources by economists.

Suggested Citation

  • Arnsperger, Chistian, 1995. "Equality of Resources Revisited Using Induced Preferences," LIDAM Discussion Papers IRES 1995012, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:1995012
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