ECONOMY

374 social choice
of game theory to the discussion of procedural justice. I propose a simple explanation
for the overwhelming success of this cross-fertilization.
Section 2 outlines a general model of mechanism design. Section 3 defines the
classical notions of procedural and endstate justice in the context of that model,
and Section 4 argues that a single-minded concern for only one mode of justice
is untenable. Section 5 submits that the property of strategy-proofness captures the
attractive mechanisms for which the two interpretations of justice coincide. Section 6
surveys the extensive research of the last three decades identifying strategy-proof
mechanisms in a variety of microeconomic problems.
2 The Microeconomic Approach
to Distributive Justice
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When political or economic resources are distributed, the two criteria by which a
selfish Homo economicus evaluates the process are his rights and his welfare. When
voting, I wish to maximize the extent to which my vote could influence the final
outcome, and I also wish that the candidate finally elected be one whom I like better
than other names on the ballot. Most of the normative discussion of allocation mechanisms
thus revolves around two main questions. With what rights are individual
agents endowed, what influence can they have on the final allocation, by what free,
unconstrained actions? To what degree does the actual distribution of resources, the
outcome, or endstate, fulfill the individual values and aspirations of the agents, what
level of welfare does it allow them to reach?
The conceptual dichotomy between rights and welfare has deep roots in
political philosophy: a good example is Berlin’s richly nuanced distinction (Berlin
1969) between negative freedom (the extent of my rights), and positive freedom
(the freedom of choosing my own goals and aspirations, and my ability to fulfill
them). In a microeconomic formulation the former is captured by a description
of the legal moves/messages each participant is allowed to make/send (e.g.
the set of admissible ballots in an election). The latter is the choice of my own
measure of welfare (my preferences) and my ability to reach a high level of
welfare.
Ignoring several subtle aspects of the interaction between individual rights and
welfare (on which more, three paragraphs below), many canonical models of resource
allocation are described as a 4-tuple (N, X, R, G)where:
the “society” is the set N = {1, 2,...n} of concerned agents, with generic element
i, i ∈ N.
the set X describes all feasible states of the world, or endstates; in particular X
embodies the set of resources and technological constraints.