47 Pages Posted: 7 Apr 2000
Date Written: 1999
In this article I introduce legal scholars to concepts of fairness developed by microeconomic theorists. My starting point is a review of the books: Cooperative Microeconomics: A Game-Theoretic Introduction, by Herve Moulin, and Equity: In Theory and Practice, by H. Peyton Young. The books explain how to use cooperative game theory to study the fair allocation of benefits and costs. I illustrate the use of cooperative game theory by applying it to various problems of fair division in the law. I believe formal analysis of fair division is valuable because it allows scholars to connect their intuitive sense of fairness to a particular solution concept and an underlying set of axioms. I apply the Shapley value and the nucleolus solutions to the problem of the fair assignment of property rights in a nuisance problem. I explain the axioms that give rise to each of these solution concepts, and I suggest that one can identify the moral significance of a solution concept with the content of its axioms (and the implicit assumptions hidden in the statement of the problem). Finally, I comment on the problems with implementing fair division schemes, and the relationship between fairness and efficiency.
JEL Classification: C71, K00
Suggested Citation: Suggested Citation