A free and fair economy : a game of justice and inclusion / Ghislain-Herman Demeze-Jouatsa, Roland Pongou, Jean-Baptiste Tondji
VerfasserDemeze-Jouatsa, Ghislain-Herman ; Pongou, Roland ; Tondji, Jean-Baptiste
ErschienenBielefeld, Germany : Center for Mathematical Economics (IMW), Bielefeld University, July 2021
Elektronische Ressource
Umfang1 Online-Ressource (48 Seiten)
SerieCenter for Mathematical Economics Working papers ; 653
SchlagwörterUnternehmen / Markteffizienz / Nash-Gleichgewicht / Strategisches Spiel
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A free and fair economy [0.54 mb]

Frequent violations of fair principles in real-life settings raise the fundamental question of whether such principles can guarantee the existence of a self-enforcing equilibrium in a free economy. We show that elementary principles of distributive justice guarantee that a pure-strategy Nash equilibrium exists in a finite economy where agents freely (and non- cooperatively) choose their inputs and derive utility from their pay. Chief among these principles is that: 1) your pay should not depend on your name; and 2) a more productive agent should not earn less. When these principles are violated, an equilibrium may not exist. Moreover, we uncover an intuitive condition|technological monotonicity|that guarantees equilibrium uniqueness and efficiency. We generalize our findings to economies with social justice and inclusion, implemented in the form of progressive taxation and redistribution, and guaranteeing a basic income to unproductive agents. Our analysis uncovers a new class of strategic form games by incorporating normative principles into non-cooperative game theory. Our results rely on no particular assumptions, and our setup is entirely non- parametric. Illustrations of the theory include applications to exchange economies, surplus distribution in a firm, contagion and self-enforcing lockdown in a networked economy, and bias in the academic peer-review system.

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