Kantian Optimization, Social Ethos, and Pareto Efficiency

John Roemer

No 1854, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

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.

Keywords: Kantian equilibrium; Social ethos; Implementation (search for similar items in EconPapers)
JEL-codes: C70 D60 D62 D64 H30 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2012-03
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-hme, nep-hpe, nep-mic and nep-soc
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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