IDEAS home Printed from https://ideas.repec.org/a/spr/italej/v8y2022i3d10.1007_s40797-021-00152-5.html
   My bibliography  Save this article

The Impossibility of a Paretian Liberal, Game Theory and Negotiation

Author

Listed:
  • Aldo Montesano

    (Bocconi University)

Abstract

Sen (J Polit Econ 78:152–157, 1970) has shown the possible contrast between the social preferences of individuals and their choices. This contrast prevents, in many situations, a social choice that satisfies both Pareto-optimality and liberalism. What liberalism can mean in the field of social choice and the relevance of social organization are briefly discussed. Sen's example, using game theory, determines an equilibrium that is not Pareto-optimal. The contrast between social choice and liberalism discussed by Sen derives from the presence of externalities and happens because it is assumed that individuals are isolated, that is, unable to negotiate with each other to reach a more convenient result for everyone. This paper introduces a kind of negotiation that determines a Pareto-optimal equilibrium if the negotiation is successful. Sen's example leads, using this bargaining process, to a Pareto-optimal equilibrium which is better for both individuals than the Nash equilibrium. This result does not imply that a negotiation always leads to a satisfactory equilibrium. Negotiation can lead to a Pareto-optimal agreement, which, however, is rejected by an individual, as this agreement is no better for him than equilibrium without negotiation, so that Sen’s dilemma reappears.

Suggested Citation

  • Aldo Montesano, 2022. "The Impossibility of a Paretian Liberal, Game Theory and Negotiation," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 8(3), pages 719-732, November.
    • Handle: RePEc:spr:italej:v:8:y:2022:i:3:d:10.1007_s40797-021-00152-5
    DOI: 10.1007/s40797-021-00152-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40797-021-00152-5
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40797-021-00152-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. repec:bla:econom:v:59:y:1992:i:234:p:161-77 is not listed on IDEAS
    2. Gibbard, Allan, 1974. "A Pareto-consistent libertarian claim," Journal of Economic Theory, Elsevier, vol. 7(4), pages 388-410, April.
    3. Sen, Amartya Kumar, 1970. "The Impossibility of a Paretian Liberal," Scholarly Articles 3612779, Harvard University Department of Economics.
    4. Sen, Amartya, 1970. "The Impossibility of a Paretian Liberal," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 152-157, Jan.-Feb..
    5. Sergiu Hart & Andreu Mas-Colell, 2010. "Bargaining and Cooperation in Strategic Form Games," Journal of the European Economic Association, MIT Press, vol. 8(1), pages 7-33, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christian Seidl, 1990. "On the impossibility of a generalization of the libertarian resolution of the liberal paradox," Journal of Economics, Springer, vol. 51(1), pages 71-88, February.
    2. Bezalel Peleg & Ron Holzman, 2017. "Representations of Political Power Structures by Strategically Stable Game Forms: A Survey," Games, MDPI, vol. 8(4), pages 1-17, October.
    3. Ben McQuillin & Robert Sugden, 2011. "The representation of alienable and inalienable rights: games in transition function form," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 37(4), pages 683-706, October.
    4. Stanley Reiter, 2001. "Interdependent Preferences and Groups of Agents," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 3(1), pages 27-67, January.
    5. Piacquadio Paolo G. & Di Bartolomeo Giovanni & Acocella Nicola, 2009. "A simple framework for investigating the properties of policy games," wp.comunite 0059, Department of Communication, University of Teramo.
    6. John W. Patty & Elizabeth Maggie Penn, 2019. "A defense of Arrow’s independence of irrelevant alternatives," Public Choice, Springer, vol. 179(1), pages 145-164, April.
    7. Kretz, Claudio, 2021. "Consistent rights on property spaces," Journal of Economic Theory, Elsevier, vol. 197(C).
    8. Massimiliano Vatiero, 2023. "Extending Amartya Sen’s Paretian Liberal Paradox to a Firm’s Hierarchy," DEM Working Papers 2023/3, Department of Economics and Management.
    9. Keith L. Dougherty & Julian Edward, 2022. "The effect of unconditional preferences on Sen’s paradox," Theory and Decision, Springer, vol. 93(3), pages 427-447, October.
    10. Perote-Pena, Juan & Piggins, Ashley, 2005. "Pareto efficiency with spatial rights," Journal of Mathematical Economics, Elsevier, vol. 41(3), pages 265-283, April.
    11. A. Hamlin, 1985. "The political economy of constitutional federalism," Public Choice, Springer, vol. 46(2), pages 187-195, January.
    12. Agnieszka Rusinowska, 2013. "Bezalel Peleg and Hans Peters: Strategic Social Choice. Stable Representations of Constitutions, Studies in choice and welfare, Springer, 2010, 154 pp," PSE-Ecole d'économie de Paris (Postprint) hal-00666816, HAL.
    13. repec:ebl:ecbull:v:30:y:2010:i:1:p:103-114 is not listed on IDEAS
    14. Friedrich Breyer & Roy Gardner, 1980. "Liberal paradox, game equilibrium, and Gibbard optimum," Public Choice, Springer, vol. 35(4), pages 469-481, January.
    15. Herrade Igersheim, 2006. "Libéralisme de la liberté versus libéralisme du bonheur. Le cas du paradoxe libéral-parétien," Revue économique, Presses de Sciences-Po, vol. 57(3), pages 389-398.
    16. Berrens, Robert P. & Polasky, Stephen, 1995. "The Paretian Liberal Paradox and ecological economics," Ecological Economics, Elsevier, vol. 14(1), pages 45-56, July.
    17. Ruvin Gekker, 1992. "On the strategic inconsistency of the meta-rights approach," Journal of Economics, Springer, vol. 55(3), pages 265-275, October.
    18. Biung-Ghi Ju, 2010. "Individual powers and social consent: an axiomatic approach," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 34(4), pages 571-596, April.
    19. Maurice Salles, 2006. "La théorie du choix social : de l'importance des mathématiques," Economics Working Paper Archive (University of Rennes & University of Caen) 200617, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    20. Roth, Timothy P., 2000. "Efficiency: An inappropriate guide to structural transformation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 29(1), pages 109-126.
    21. Kotaro Suzumura, 2002. "Introduction to social choice and welfare," Temi di discussione (Economic working papers) 442, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    Keywords

    Liberalism; Pareto optimality; Game theory; Bargaining;
    All these keywords.

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D60 - Microeconomics - - Welfare Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:italej:v:8:y:2022:i:3:d:10.1007_s40797-021-00152-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.