Sustainability and Fairness Simulations Based on Decision-Making Model of Utility Function and Norm Function

Takeshi Kato, Yasuyuki Kudo, Junichi Miyakoshi, Jun Otsuka, Hayato Saigo, Kaori Karasawa, Hiroyuki Yamaguchi, Yoshinori Hiroi and Yasuo Deguchi

Applied Economics and Finance, 2020, vol. 7, issue 3, 96-114

Abstract: We introduced a decision-making model based on value functions that included individualistic utility function and socio-constructivistic norm function and proposed a norm-fostering process that recursively updates norm function through mutual recognition between the self and others. As an example, we looked at the resource-sharing problem typical of economic activities and assumed the distribution of individual actions to define the (1) norm function fostered through mutual comparison of value/action ratio based on the equity theory (progressive tax-like), (2) norm function proportional to resource utilization (proportional tax-like) and (3) fixed norm function independent of resource utilization (fixed tax-like). By carrying out numerical simulation, we showed that the progressive tax-like norm function (i) does not increase disparity for the distribution of the actions, unlike the other norm functions, and (ii) has high resource productivity and low Gini coefficient. Therefore the progressive tax-like norm function has the highest sustainability and fairness.

Date: 2020
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