Aghion, P.; Bolton, P.; (2003) Incomplete social contracts. Journal of the European Economic Association , 1 (1) pp. 38-67. 10.1162/154247603322256765.

Preview

PDF 17702.pdf Download (128kB)

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 exante 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.

Download activity - last month

Export as XMLJSONCSV

Download activity - last 12 months

Export as JSONXMLCSV

Downloads by country - last 12 months

Export as XMLJSONCSV

Archive Staff Only

View Item