Inequality and Uncertainty: Theory and Legal Applications

Welfarism is the principle that social policy should be based solely on individual well-being, with no reference to \u27fairness or rights. The propriety of this approach has recently been the subject of extensive debate within legal scholarship. Rather than contributing (directly) to this debate, we identify and analyze a problem within welfarism that has received far too little attentioncall this the ex ante/ex post problem. The problem arises from the combination of uncertainty-an inevitable feature of real policy choice-and a social preference for equality. If the policymaker is not a utilitarian, but rather has a social welfare function that is equity regarding to some degree, then she faces a critical choice. Should she care about the equalization of expected well-being (the ex ante approach), or should she care about the expected equalization of actual well-being (the ex post approach)? Should she focus on the equality of prospects or the prospects for equality? In this Article, we bring the ex ante/ex post problem to the attention of legal academics, provide novel insight into when and why the problem arises, and highlight legal applications where the problem figures prominently. We ultimately conclude that welfarism requires an ex post approach. This is a counterintuitive conclusion, because the ex post approach can conflict with ex ante Pareto superiority. Indeed, this Article demonstrates that the ex post application of every equity-regarding social welfare function-whatever its particular form-must conflict with ex ante Pareto superiority in specific situations. Among other things, then, this Article shows that legal academics who care about equity must abandon either their commitment to welfarism or their commitment to ex ante Pareto superiorit

Inequality and Uncertainty: Theory and Legal Applications

Welfarism is the principle that social policy should be based solely on individual well-being, with no reference to \u27fairness or rights. The propriety of this approach has recently been the subject of extensive debate within legal scholarship. Rather than contributing (directly) to this debate, we identify and analyze a problem within welfarism that has received far too little attentioncall this the ex ante/ex post problem. The problem arises from the combination of uncertainty-an inevitable feature of real policy choice-and a social preference for equality. If the policymaker is not a utilitarian, but rather has a social welfare function that is equity regarding to some degree, then she faces a critical choice. Should she care about the equalization of expected well-being (the ex ante approach), or should she care about the expected equalization of actual well-being (the ex post approach)? Should she focus on the equality of prospects or the prospects for equality? In this Article, we bring the ex ante/ex post problem to the attention of legal academics, provide novel insight into when and why the problem arises, and highlight legal applications where the problem figures prominently. We ultimately conclude that welfarism requires an ex post approach. This is a counterintuitive conclusion, because the ex post approach can conflict with ex ante Pareto superiority. Indeed, this Article demonstrates that the ex post application of every equity-regarding social welfare function-whatever its particular form-must conflict with ex ante Pareto superiority in specific situations. Among other things, then, this Article shows that legal academics who care about equity must abandon either their commitment to welfarism or their commitment to ex ante Pareto superiorit

Insider Trading in a Globalizing Market: Who Should Regulate What?

As the market for securities becomes increasingly global, the question of whose rules should apply to any particular transaction will arise with increasing frequency. The issue is examined

SUSTAINABILITY AS INTERGENERATIONAL FAIRNESS

This paper presents an economic model of sustainability defined as intergenerational fairness. Assuming that intergenerational fairness is an obligation of each generation, a recursive optimization problem is obtained. The problem has the advantage that uncertainty can readily be incorporated in the model and it can be solved numerically for a wide range of specifications. The possibility of tradeoffs between efficiency and sustainability are discussed. Under plausible conditions, it is show that a sustainability obligation is met only if there is the expectations of economic growth.Agribusiness,

Fair social decision under uncertainty and belief disagreements

This paper aims to address two issues related to simultaneous aggregation of utilities and beliefs. The first one is related to how to integrate both inequality and uncertainty considerations into social decision making. The second one is related to how social decision should take disagreements in beliefs into account. To accomplish this, whereas individuals are assumed to abide by Savage model’s of subjective expected utility, society is assumed to prescribe, either to each individual when the ex ante individual well-being is favored or to itself when the ex post individual well-being is favored, acting in accordance with the maximin expected utility theory of Gilboa and Schmeidler (J Math Econ 18:141–153, 1989). Furthermore, it adapts an ex ante Pareto-type condition proposed by Gayer et al. (J Legal Stud 43:151–171, 2014), which says that a prospect Pareto dominates another one if the former gives a higher expected utility than the latter one, for each individual, for all individuals’ beliefs. In the context where the ex ante individual welfare is favored, our ex ante Pareto-type condition is shown to be equivalent to social utility taking the form of a MaxMinMin social welfare function, as well as to the individual set of priors being contained within the range of individual beliefs. However, when the ex post individual welfare is favored, the same Pareto-type condition is shown to be equivalent to social utility taking the form of a MaxMinMin social welfare function, as well as to the social set of priors containing only weighted averages of individual beliefs