The Pure Compensation Problem: Egalitarianism versus Laissez-Fairism
A binary choice problem with side-payments and quasilinear utilities is considered. The au-thor studies two compensation rules, called social choice functions. The egalitarian rule divides equally the surplus above the average utility level. The laissez faire rule chooses an efficient decision but performs no transfer. Egalitaria nism is characterized by a monotonicity axiom called Agreement: no tw o agents ever disagree in comparing two distinct preferences of a thi rd one. Laissez fairism is characterized by the No Subsidy axiom: a c oalition would not be worse off if the other agents were not present. Copyright 1987, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Volume (Year): 102 (1987)
Issue (Month): 4 (November)
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