A Rawlsian View of CSR and the Game Theory of its Implementation (Part II): Fairness and Equilibrium

Lorenzo Sacconi

Chapter 8 in Corporate Social Responsibility and Corporate Governance, 2011, pp 194-252 from Palgrave Macmillan

Abstract: Abstract This is the second part of an comprehensive essay of the Rawlsian view of corporate social responsibility (CSR thereafter) understood as an extended model of corporate governance and objective function, based on the extension of fiduciary duties owed to the sole owner of the firm to all the company stakeholder (for this definition see part I, Sacconi, 2010a, infra). As in the first part, CSR is also understood as a self-sustaining institution - i.e. as a self-sustaining system of descriptive and normative beliefs consistent with the equilibrium behaviors performed repeatedly by agents in the domain of action of corporate governance (firms and their stakeholders). But equilibria are multiple in the game representing the strategic interaction among the firm and its stakeholders - modeled as a repeated trust game or some similar ‘social dilemma game’ (Ostrom, 1990). Thus asserting that CSR satisfies the Nash equilibrium condition as an institution is not enough. There is also an equilibrium selection problem. This the place where the Rawlsian social contract (Rawls, 1971, 1993) enters again the picture by performing its main role as normative equilibrium selection device from the ex ante perspective: that is, the ex ante impartial selection of a unique equilibrium amongst the many possible in the repeated trust game involving the firms and its stakeholders. Note that this was its second role previously suggested (see section 5 part I, and left to this part where it is treated at length), as distinguished from the role of shaping the players’ expectations so that in the ex post perspective they are able to predict the agreed solution as the result of a cognitive process of beliefs convergence to the equilibrium, which is focused on in part III, (see Sacconi, 2011 and Sacconi 2008).

Keywords: Corporate Governance; Social Contract; Bargaining Solution; Bargaining Game; Outcome Space (search for similar items in EconPapers)
Date: 2011
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Working Paper: A Rawlsian View of CSR and the Game Theory of its Implementation (Part II): Fairness and Equilibrium (2010)
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DOI: 10.1057/9780230302112_8

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