This paper proposes “cooperation” as a possible economic model to replace “competition”, leading to what is called Kantian equilibria, as opposed to traditional Nash-Walras equilibria, because Kantian optimisers achieve better results than Nash optimisers.
Abstract. Although evidence accrues in biology, anthropology and experimental economics that homo sapiens is a cooperative species, the reigning assumption in economic theory is that individuals optimize in an autarkic manner (as in Nash and Walrasian equilibrium). I here postulate a cooperative kind of optimizing behavior, called Kantian. It is shown that in simple economic models, when there are negative externalities (such as congestion effects from use of a commonly owned resource) or positive externalities (such as a social ethos reflected in individuals’ preferences), Kantian equilibria dominate Nash-Walras equilibria in terms of efficiency. While economists schooled in Nash equilibrium may view the Kantian behavior as utopian, there is some – perhaps much — evidence that it exists. If cultures evolve through group selection, the hypothesis that Kantian behavior is more prevalent than we may think is supported by the efficiency results here demonstrated.
Here’s a short quote from the paper:
Regardless of the motive, as is well-known, redistributive taxation induces, to some degree, allocative inefficiency. The solution is second-best.
Among economists, there have been two principal strategies to explain behavior that is not easily explained as a Nash equilibrium of the game that agents appear to be playing: the first is that the real game is a repeated one, or is thought to be a repeated game by the players, and they are indeed playing a Nash equilibrium of that game. The second is that players have other-regarding preferences: they are to some degree altruistic. Outcomes are then explained as Nash equilibria of games whose players have non-classical (i.e., non-self-interested) preferences.
Here, I introduce another approach. I propose that players are optimizing in a non-classical manner. This leads to a class of equilibrium concepts that I call Kantian equilibria. Briefly, with Kantian optimization, agents ask themselves, at a particular set of actions/strategies in a game: If I were to deviate from my stipulated action, and all others were to deviate in like manner from their stipulated actions, would I prefer the consequences of the new action profile? I denote this kind of thinking Kantian because an individual only deviates in a particular way, at an action profile, if he would prefer the situation in which his action were universalized – that is to say, he’d prefer the action profile where all make the kind of deviation he is contemplating. Each agent evaluates not the profile that would result if only he deviated, but rather the profile of actions that would result if all deviated in similar fashion. Kant’s categorical imperative says: Take those and only those actions that are universalizable, meaning that the world would be better (according to one’s own preferences) were one’s behavior universalized. It is important that the new action profile be evaluated with one’s own preferences, which need not be altruistic.
Finally, here’s an interesting interview of the paper’s author: http://www.yale.edu/macmillanreport/ep22-roemer-051309.html
(Old link no longer works. Just google it …)