Week 2 Short Essay

Week 2 Short Essay - Alexander Zouev Economics Week 2, HT...

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Alexander Zouev Economics Week 2, HT YR1 Week 2 Short Essay “An economy in which people selfishly pursue their own objectives can never achieve the objectives of a fair society. Competitive markets are efficient, so we should not attempt to interfere with them.” Adjudicate. The wording in the first statement of the question raises an interesting point of what are the objectives of a “fair” society? Behavioural economics will lead us to suggest that most people tend to have a natural bias towards equal (or at least not too unequal) divisions. In many cases, actual consumer behaviour is different from that predicted by the simple model of the rational consumer and consumers certainly will tend to prefer “fair” divisions, even at times punishing those who act “unfairly”. Here we can make a distinction between something that is Pareto efficient and whether the distribution of welfare across the people will be fair. If everyone pursues their own objectives and one person ends up getting lucky and getting everything, than although this is Pareto efficient, it is certainly not maximizing welfare and coinciding with objectives of a fair society. Here we are forced to consider the idea of fair allocations, and whether symmetric allocations are considered to be the objective of a fair society. Even if an economy symmetrically distributes, and everyone pursues their own objectives, we cannot say that the Pareto efficient allocation is still fair in any sense and that the trade from equal division inherits any of the symmetry of the starting point. Only if the original
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Week 2 Short Essay - Alexander Zouev Economics Week 2, HT...

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