Quarterly Journal of Economics Vol. 102 No. 4 1987
The Pure Compensation Problem: Egalitarianism Versus Laissez-Fairism
Abstract
A binary choice problem with side-payments and quasi-linear utilities is considered. We study two compensation rules, called social choice functions. The egalitarian rule divides equally the surplus above the average utility level. The laissez-faire rule chooses an efficient decision but performs no transfer. Egalitarianism is characterized by a monotonicity axiom called Agreement: no two agents ever disagree in comparing two distinct preferences of a third one. Laissez-fairism is characterized by the No Subsidy axiom: a coalition would not be worse off if the other agents were not present.
- DOI
- 10.2307/1884280
- Volume
- 102
- Issue
- 4
- Pages
- 769
- Sources
- openalex crossref