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Kantian Optimization, Social Ethos, and Pareto Efficiency


  • John E. Roemer


Although evidence accrues in biology, anthropology and experimental economics that homo sapiens is a cooperative species, the reigning assumption in economic theory is that individuals optimize in an autarkic manner (as in Nash and Walrasian equilibrium). I here postulate an interdependent kind of optimizing behavior, called Kantian. It is shown that in simple economic models, when there are negative externalities (such as congestion effects from use of a commonly owned resource) or positive externalities (such as a social ethos reflected in individuals’ preferences), Kantian equilibria dominate Nash-Walras equilibria in terms of efficiency. While economists schooled in Nash equilibrium may view the Kantian behavior as utopian, there is some -- perhaps much -- evidence that it exists. If cultures evolve through group selection, the hypothesis that Kantian behavior is more prevalent than we may think is supported by the efficiency results here demonstrated.
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  • John E. Roemer, 2012. "Kantian Optimization, Social Ethos, and Pareto Efficiency," Levine's Working Paper Archive 786969000000000407, David K. Levine.
  • Handle: RePEc:cla:levarc:786969000000000407

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    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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