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Kantian Optimization, Social Ethos, and Pareto Efficiency

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Abstract

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.

Suggested Citation

  • John E. Roemer, 2012. "Kantian Optimization, Social Ethos, and Pareto Efficiency," Cowles Foundation Discussion Papers 1854, Cowles Foundation for Research in Economics, Yale University.
  • Handle: RePEc:cwl:cwldpp:1854
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    File URL: https://cowles.yale.edu/sites/default/files/files/pub/d18/d1854.pdf
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Kantian Optimisation
      by Nicholas Gruen in Club Troppo on 2012-03-27 12:55:50

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    Cited by:

    1. Reuben Soto, Sergio, 2019. "La acumulación de capital, transgresora de la organización económica [The Accumulation of Capital, transgressor of the Economic Organization]," MPRA Paper 106544, University Library of Munich, Germany.
    2. Shintaro Tamate, 2015. "External Norms and Systematically Observed Norms," The Japanese Economic Review, Japanese Economic Association, vol. 66(2), pages 247-259, June.

    More about this item

    Keywords

    Kantian equilibrium; Social ethos; Implementation;
    All these keywords.

    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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