Incomplete Social Contracts
نویسندگان
چکیده
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. (JEL: H11, G33, G34, D63, P16, P48) . . . What, failing a prior agreement, is the source of the minority’s obligation to submit to the choice of majority? . . . The majority principle is itself a product of agreement, and presupposes unanimity on at least one occasion. Jean-Jacques Rousseau
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