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The permissible and the forbidden

Author

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  • Richter, Michael
  • Rubinstein, Ariel

Abstract

In many economic situations, neither prices nor authority rules. Rather, individual behavior is governed by social norms that specify what is allowed (socially acceptable) and what is forbidden (socially unacceptable). These norms can emerge in a decentralized way and can serve as a method to bring order to economic situations. The key component of our solution concept is a uniform permissible set which plays a role parallel to that of a price system in competitive equilibrium. The concept is analyzed and applied to a variety of economic and social settings.

Suggested Citation

  • Richter, Michael & Rubinstein, Ariel, 2020. "The permissible and the forbidden," Journal of Economic Theory, Elsevier, vol. 188(C).
    • Handle: RePEc:eee:jetheo:v:188:y:2020:i:c:s0022053120300405
    DOI: 10.1016/j.jet.2020.105042
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    References listed on IDEAS

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    1. Sprumont, Yves, 1991. "The Division Problem with Single-Peaked Preferences: A Characterization of the Uniform Allocation Rule," Econometrica, Econometric Society, vol. 59(2), pages 509-519, March.
    2. Michael Richter & Ariel Rubinstein, 2015. "Back to Fundamentals: Equilibrium in Abstract Economies," American Economic Review, American Economic Association, vol. 105(8), pages 2570-2594, August.
    3. Varian, Hal R., 1974. "Equity, envy, and efficiency," Journal of Economic Theory, Elsevier, vol. 9(1), pages 63-91, September.
    4. Elisha A. Pazner & David Schmeidler, 1978. "Egalitarian Equivalent Allocations: A New Concept of Economic Equity," The Quarterly Journal of Economics, Oxford University Press, vol. 92(4), pages 671-687.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ariel Rubinstein & Kemal Yıldız, 2022. "An étude in modeling the definability of equilibrium," Review of Economic Design, Springer;Society for Economic Design, vol. 26(4), pages 543-552, December.
    2. Alvaro Sandroni & Leo Katz, 2024. "The leveling axiom," Theory and Decision, Springer, vol. 96(1), pages 135-152, February.
    3. Leo Katz & Alvaro Sandroni, 2021. "The (Non) Economic Properties of the Law," Games, MDPI, vol. 12(1), pages 1-8, March.
    4. Cole, Richard & Tao, Yixin, 2021. "On the existence of Pareto Efficient and envy-free allocations," Journal of Economic Theory, Elsevier, vol. 193(C).
    5. Marek Hudik, 2020. "Equilibrium as compatibility of plans," Theory and Decision, Springer, vol. 89(3), pages 349-368, October.

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    More about this item

    Keywords

    Y-equilibrium; General equilibrium; Social norms; Convexity; Envy-free;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D39 - Microeconomics - - Distribution - - - Other
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General

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