Tuesday, January 21, 2020

Not Incentive-Compatible

Kant is wrong to assume that everything is best fitted to its purpose.  In particular, nothing says that homo sapiens is well equipped for living in large societies.  If he were, there would presumably be less of homo economicus in his nature and more of some antlike variety of homo behavioralis.  As a consequence, Nature has to live with societies that have second-best welfare properties.  She cannot achieve the first-best outcomes to which those like Kant aspire because the latter are not incentive-compatible.  That is to say, they are achievable only if the human beings who live in the society act in a manner that is incompatible with their nature.

-- Kenneth George "Ken" Binmore, CBE (1940 -), British mathematician, economist, and game theorist, Game Theory and the Social Contract (1994), p. 152

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