Efficiency vs. Equity: New Study Reveals Impact on Social Preferences.
Social preferences can sometimes clash between efficiency and fairness. Researchers studied how to rank different outcomes based on these principles. They found that the order in which efficiency and fairness are considered can greatly affect the results. By using a specific notion of fairness called egalitarian-equivalence, they explored how rational social preferences can be. The study revealed various impossibility and possibility results, as well as a way to characterize social preferences. The findings were compared to a scenario where fairness is defined as no-envy.