Stakeholder Fairness Under an Induced ‘Veil of Ignorance'

John Rawls introduced the ‘veil of ignorance' in social contract theory to bring about a common conception of justice, and hypothesized that it will enable rational individuals to choose distributive shares on basis of ‘maximin' principle. R. E. Freeman conceptualised stakeholder fairness using the Rawlsian ‘veil of ignorance'. In contrast to Rawls' theory, John Harsanyi postulated that rational individuals behind the ‘veil of ignorance' will choose allocation to maximise expected utility. This article investigates how subjects choose allocations behind the ‘veil of ignorance,' in a laboratory experiment, and interprets the findings in light of stakeholder fairness. The ‘veil of ignorance' was induced on randomly paired and mutually anonymous subjects, who were asked to choose allocations in a simultaneous move discrete choice Nash demand game. Both ‘maximin' principle and expected utility maximisation was found to be used by the subjects. Choice of allocations where no one is worse off vis-à-vis status quo was salient. This is consistent with Freeman's Principle of Governance.

Evolution of Three Norms of Distributive Justice in an Extended Nash Demand Game

The Nash demand game (NDG) has been at the center of attention when explaining moral norms of distributive justice on the basis of the game theory. This paper describes the demand-intensity game (D-I game), which adds an “intensity” dimension to NDG in order to discuss various scenarios for the evolution of norms concerning distributive justice, while keeping such simplicity that it can be analyzed by the concepts and tools of the game theory. We perform an ESS analysis and evolutionary simulations, followed by the analysis of replicator dynamics. It is shown that the three norms emerge: the one claiming an equal distribution (Egalitarianism), the one claiming the full amount (Libertarianism), and, as the special case of Libertarianism, the one claiming the full amount but conceding the resource in conflict (Wimpy libertarianism). The evolution of these norms strongly depends on the conflict cost parameter. Egalitarianism emerges with a larger conflict cost while Libertarianism with a smaller cost. Wimpy libertarianism emerges with a relatively larger conflict cost in libertarianism. The simulation results show that there are three types of evolutionary scenarios in general. We see in most of the trials the population straightforwardly converges to Libertarianism or Egalitarianism. It is also shown that, in some range of the conflict cost, the population nearly converges to Egalitarianism, which is followed by the convergence to Libertarianism. It is shown that this evolutionary transition depends on the quasi stability of Egalitarianism.