How to shake the Invisible Hand (when Robinson meets Friday)
AbstractWe propose to define the invisible hand by (i) modelling the mechanism itself (not to just assume its existence) and (ii) making explicit the limit conditions for its working. For that purpose, we simply assimilate the working of the invisible hand mechanism to the existence of a social preference such that individual and social optimalities are consistent. In introducing the possibility of interaction among individuals, we then suggest that the standard Robinson case or social atomicity is just a degenerate feature of a more general requirement that we call the Global Network Agreement. Our main result is that the invisible hand mechanism does keep on working when there is an interaction between Robinson and Friday if the former (resp. the latter) is sensitive to the latter (resp. the former) in such a way that they exhibit some agreement in preferences. Hence, the Robinson case naturally satisfies this property since nor Robinson neither Friday can disagree with himself. But more cooperative situations are also allowed in order to extent the invisible hand mechanism to cases with interactions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by HAL in its series PSE Working Papers with number halshs-00588081.
Date of creation: May 2007
Date of revision:
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00588081
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/
preferences ; social interaction ; invisible hand;
Other versions of this item:
- Antoine Billot, 2009. "How to shake the invisible hand (when Robinson meets Friday)," International Journal of Economic Theory, The International Society for Economic Theory, The International Society for Economic Theory, vol. 5(3), pages 257-270.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Mukherji, Anjan, 2012.
"The Second Fundamental Theorem of Positive Economics,"
Working Papers, National Institute of Public Finance and Policy
12/98, National Institute of Public Finance and Policy.
- Anjan Mukherji, 2012. "The second fundamental theorem of positive economics," International Journal of Economic Theory, The International Society for Economic Theory, The International Society for Economic Theory, vol. 8(2), pages 125-138, 06.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).
If references are entirely missing, you can add them using this form.