Work

Incomplete Social Contracts

Year: 2003

Type: article

Abstract: There is a long normative ‘Social Contract’ tradition that attempts to characterize ex-post income inequalities that are agreeable to all ‘behind a veil of ignorance.’ This paper takes a similar normative approach to characterize social decision-making procedures. It is shown that quite generally some form of majority-voting is preferred to unanimity ‘behind a veil of ignorance’ whenever society faces deadweight costs in making compensating transfers. Deviations from unanimity (or ex-post Pareto optimality) are ex-ante efficient to the extent that they economize on costly compensating transfers. Put another way, the optimal decision rule trades off the benefits of minority protection and those from greater flexibility.

Source: Journal of the European Economic Association

DOI: 10.1162/154247603322256765

Authors: Philippe Aghion, Patrick Bolton

Institutions: Harvard University, University College London, Princeton University

Language: English

Topic: Game Theory and Voting Systems

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Reduced inequalities

Open Access status: bronze

OpenAlex ID: W2099149642