Fair Play Equilibria in Normal Form Games

For a social code of conduct to gain universal acceptance in a society, it would have to satisfy minimum requirements of consistency and procedural justice. The so-called universalizability principle in ethics says that any moral judgement made for an action of a person in a situation should be universalizable to other persons’ actions in situations that are identical in relevant respects. By adapting standard axioms in social choice theory, we formalize this principle in the framework of normal form games and study its implications on equilibrium outcomes. A social code specifies socially acceptable responses against other individuals’ behavior. A fair play equilibrium is an action profile where everyone behaves optimally subject to the social code. We show that for any admissible social code, the set of fair play equilibria coincides with that of Nash equilibria in all games. The result identifies a conflict between the universalizability principle and what a social code can achieve as equilibrium outcomes. JEL Classification: C70, D63, D71