Informed preference consequentialism, contractarianism and libertarian paternalism: on Harsanyi, Rawls and Robert Sugden’s The Community of Advantage

Robert Sugden abandons certain central tenets of traditional welfare economics and recommends a contractarian alternative. He rejects ‘Libertarian Paternalism’ (LP) and related ‘paternalistic’ proposals. The seeds of ‘paternalism’ inspired by the findings of behavioural economics can be found in informed preference views associated with J.S. Mill and John Harsanyi. Nonetheless, those who endorse a combination of the informed preference view of welfare, consequentialism and welfarism—‘informed preference consequentialists’—have good reasons to resist the agenda of LP. John Rawls adopts a variation of the informed preference view. Contracting parties in his theory accept ‘paternalistic principles’. Sugden’s claim that contractarians cannot be ‘paternalists’ does not generalise to all contractarian theories. Sugden’s and Rawls’ contractarian positions are in important respects different.

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.

Rationalism and Security

In 1969, the game theorist John Harsanyi wrote an article criticizing the two main postulates of the general theory of social behavior prevalent at the time: the functionalist approach to the explanation of social institutions and the conformist approach to the explanation of individual behavior. According to Harsanyi, functionalist and conformist theories overstated the degree of consensus in societies, could not account for change, and described observed behavior without explaining it. Harsanyi proposed an alternative approach provided by theories based on the concept of rational choice (rational behavior, or rational decision-making). His goal was to develop a hypothetico-deductive theory explaining (and possibly predicting) a large number of empirical facts from a few relatively simple theoretical assumptions or axioms. Among students of international politics, Harsanyi’s approach sparked a controversy about rationalism. However, some critics of rationalism do not distinguish clearly between the interest-based theories Harsanyi criticized and the rational choice methods he advocated, and some even confuse both with neoclassical economics. In order to understand the issues raised in the controversy about rationalism, it is helpful to look at interest-based theories of politics and their relation to neoclassical economics. Game theory has provided a useful framework for the intellectual agenda outlined by Harsanyi, especially in the area of international security.

Original Position Models, Trade-offs and Continuity

John Harsanyi has offered an argument grounded in Bayesian decision theory that purports to show that John Rawls's original position analysis leads directly to utilitarian conclusions. After explaining why a prominent Rawlsian line of response to Harsanyi's argument fails, I argue that a seemingly innocuous Bayesian rationality assumption, the continuity axiom, is at the heart of a fundamental disagreement between Harsanyi and Rawls. The most natural way for a Rawlsian to respond to Harsanyi's line of analysis, I argue, is to reject continuity. I then argue that this Rawlsian response fails as a defence of the difference principle, and I raise some concerns about whether it makes sense to posit the discontinuities needed to support the other elements of Rawls's view, although I suggest that Rawls may be able to invoke discontinuity to vindicate part of his first principle of justice.

CONTRACTUALISM'S (NOT SO) SLIPPERY SLOPE

Familiar questions about whether or how far to impose risks of harm for social benefit present a fundamental dilemma for contractualist moral theories. If contractualism allows “ex post” objections by considering actual outcomes, it becomes difficult to justify the risks created by most public policy, leaving contractualism at odds with moral commonsense in much the way utilitarianism is. But if contractualism instead takes a fully “ex ante” form by considering only expected outcomes, it becomes unclear how it recommends something other than aggregative cost-benefit decision-making. Focusing on T.M. Scanlon's version, this paper develops this basic choice of interpretation and recommends the ex ante version. The paper explains how contractualism is inconsistent with John Harsanyi–style utilitarianism and how contractualism supplies a principled framework for walking a careful line between the “bad aggregation” characteristic of utilitarianism and the “good aggregation” that is both unavoidable and fully appropriate in public life.

SOCIAL JUSTICE, GENOMIC JUSTICE AND THE VEIL OF IGNORANCE: HARSANYI MEETS MENDEL

John Harsanyi and John Rawls both used the veil of ignorance thought experiment to study the problem of choosing between alternative social arrangements. With his ‘impartial observer theorem’, Harsanyi tried to show that the veil of ignorance argument leads inevitably to utilitarianism, an argument criticized by Sen, Weymark and others. A quite different use of the veil-of-ignorance concept is found in evolutionary biology. In the cell-division process called meiosis, in which sexually reproducing organisms produce gametes, the chromosome number is halved; when meiosis is fair, each gene has only a fifty percent chance of making it into any gamete. This creates a Mendelian veil of ignorance, which has the effect of aligning the interests of all the genes in an organism. This paper shows how Harsanyi's version of the veil-of-ignorance argument can shed light on Mendelian genetics. There turns out to be an intriguing biological analogue of the impartial observer theorem that is immune from the Sen/Weymark objections to Harsanyi's original.

THE HOMELESS OBSERVER: JOHN HARSANYI ON INTERPERSONAL UTILITY COMPARISONS AND BARGAINING, 1950–1964

This paper traces interpersonal utility comparisons and bargaining in the work of John Harsanyi from the 1950s to the mid-1960s. As his preoccupation with how theorists can obtain information about agents moved from an approach centered on empathetic understanding to the more distanced perspective associated with game theory, Harsanyi shifted emphasis from the social scientist’s lack of information vis-à-vis agents to agents’ lack of information about each other. In the process, he provided economists with an analytical framework they could use to study problems related to the distribution of information among agents while consolidating the perspective of a distant observer whose knowledge can replace that of real people.