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Market, Democracy, and Diversity of Individual Preferences

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  • Jain, Satish

Abstract

This paper looks at the institutions of market and democracy from the perspective of diversity. It is argued in the paper that if in a society there are communities whose command over pecuniary wealth is low, but which have other forms of wealth, a system which is essentially that of injurers not being liable for harm can result in the destruction of non-pecuniary wealth of these communities and thus lead to both immiserization and loss of diversity. With respect to the method of majority decision, one of the most important elements of democracy, the viewpoint that is put forward in the paper says that, when individuals are self-regarding, while diversity of preferences might make a formal difference, it is unlikely to make a substantive difference; but, if individuals' motivations are collective or sub-collective in nature, then it is arguable that the method of majority decision works better, from the perspective of resulting in a socially optimal outcome, when there is less diversity compared to when there is more diversity.

Suggested Citation

  • Jain, Satish, 2010. "Market, Democracy, and Diversity of Individual Preferences," Working Papers 7, JICA Research Institute.
    • Handle: RePEc:jic:wpaper:7
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    References listed on IDEAS

    as
    1. Inada, Ken-Ichi, 1969. "The Simple Majority Decision Rule," Econometrica, Econometric Society, vol. 37(3), pages 490-506, July.
    2. Jain Satish K., 2009. "The Structure of Incremental Liability Rules," Review of Law & Economics, De Gruyter, vol. 5(1), pages 373-398, June.
    3. Satish K. Jain & Ram Singh, 2002. "Efficient Liability Rules: Complete Characterization," Journal of Economics, Springer, vol. 75(2), pages 105-124, March.
    4. Kelly, Jerry S., 1974. "Necessity conditions in voting theory," Journal of Economic Theory, Elsevier, vol. 8(2), pages 149-160, June.
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