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Liberalism, rationality, and Pareto optimality

Research output: Working paper

Original languageEnglish
Unpublished23 Jan 2021

Documents

  • no harm principle

    no_harm_principle_working_paper.pdf, 241 KB, application/pdf

    Uploaded date:26 Jan 2021

    Version:Other version

King's Authors

Abstract

Rational players in game theory are neoliberal in the sense that they can choose any available action so as to maximize their payoffs. It is well known that this can result in Pareto inferior outcomes (e.g. the Prisoner’s Dilemma). Classical liberalism, in contrast, argues that people should be constrained by a no-harm principle (NHP) when they act. We show, for the first time to the best of our knowledge, that rational players constrained by the NHP will produce Pareto efficient outcomes in n-person non-cooperative games. We also show that both rationality and the NHP are required for this result.

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