We introduce values for rooted-tree and sink-tree digraph games axiomatically and provide their explicit formula representation. These values may be considered as natural extensions of the lower equivalent and upper equivalent solutions for line-graph games studied in van den Brink et al. (Econ Theory 33:349–349, 2007). We study the distribution of Harsanyi dividends. We show that the problem of sharing a river with a delta or with multiple sources among different agents located at different levels along the riverbed (...) can be embedded into the framework of a rooted-tree or sink-tree digraph game correspondingly. (shrink)

When von Neumann's and Morgenstern's Theory of Games and Economic Behavior appeared in 1944, one thought that a complete theory of strategic social behavior had appeared out of nowhere. However, game theory has, to this very day, remained a fast-growing assemblage of models which have gradually been united in a new social theory - a theory that is far from being completed even after recent advances in game theory, as evidenced by the work of the three Nobel Prize winners, John (...) F. Nash, John C. Harsanyi, and Reinhard Selten. Two of them, Harsanyi and Selten, have contributed important articles to the present volume. This book leaves no doubt that the game-theoretical models are on the right track to becoming a respectable new theory, just like the great theories of the twentieth century originated from formerly separate models which merged in the course of decades. For social scientists, the age of great discover ies is not over. The recent advances of today's game theory surpass by far the results of traditional game theory. For example, modem game theory has a new empirical and social foundation, namely, societal experiences; this has changed its methods, its "rationality. " Morgenstern (I worked together with him for four years) dreamed of an encompassing theory of social behavior. With the inclusion of the concept of evolution in mathematical form, this dream will become true. Perhaps the new foundation will even lead to a new name, "conflict theory" instead of "game theory. (shrink)

This is a paperback edition of a major contribution to the field, first published in hard covers in 1977. The book outlines a general theory of rational behaviour consisting of individual decision theory, ethics, and game theory as its main branches. Decision theory deals with a rational pursuit of individual utility; ethics with a rational pursuit of the common interests of society; and game theory with an interaction of two or more rational individuals, each pursuing his own interests in a (...) rational manner. (shrink)

It is argued that mathematical statements are "a posteriori synthetic" statements of a very special sort, To be called "structure-Analytic" statements. They follow logically from the axioms defining the mathematical structure they are describing--Provided that these axioms are "consistent". Yet, Consistency of these axioms is an empirical claim: it may be "empirically verifiable" by existence of a finite model, Or may have the nature of an "empirically falsifiable hypothesis" that no contradiction can be derived from the axioms.

Comentaré sólo la sección 2 de la contribución de Amartya Sen, donde discute un reciente artículo mío (Harsanyi, 1975).

The purpose of this paper is to show how some of the controversial questions concerning utilitarianism can be clarified by the modelling techniques and the other analytical tools of decision theory (and, sometimes, of game theory). It is suggested that the moral rules of utilitarian ethics have a logical status similar to that of the normative rules (theorems) of such formal normative disciplines as decision theory and game theory.The paper argues that social utility should be defined, not in hedonistic or (...) in ideal-utilitarian terms, but rather in terms of individual preferences, in accordance with the author's equiprobability model of moral value judgments. (shrink)

The publication in English of Karl R. Popper's The Logic of Scientific Discovery twenty-five years after the appearance of the German original, is an important event. At the time when many philosophers questioned the cognitive value of scientific hypotheses , Popper has shown how to reconcile the free use of bold explanatory hypotheses with an insistence on empirical testing. Many of Popper's views have now been accepted even by most of his earlier opponents, which is no small tribute to a (...) philosopher who had challenged an important current of opinion. But, though the basic aspects of Popper's theory have attracted considerable attention in recent years, some of his finer points have received insufficient discussion. It is hoped that the publication of this important book in English translation will now help to remedy this situation. (shrink)

It is argued that we need a richer version of Bayesian decision theory, admitting both subjective and objective probabilities and providing rational criteria for choice of our prior probabilities. We also need a theory of tentative acceptance of empirical hypotheses. There is a discussion of subjective and of objective probabilities and of the relationship between them, as well as a discussion of the criteria used in choosing our prior probabilities, such as the principles of indifference and of maximum entropy, and (...) the simplicity ranking of alternative hypotheses. (shrink)

The paper first summarizes the author's decision-theoretical model of moral behavior, in order to compare the moral implications of the act-utilitarian and of the rule-utilitarian versions of utilitarian theory. This model is then applied to three voting examples. It is argued that the moral behavior of act-utilitarian individuals will have the nature of a noncooperative game, played in the extensive mode, and involving action-by-action maximization of social utility by each player. In contrast, the moral behavior of rule-utilitarian individuals will have (...) the nature of a cooperative game, played in the normal mode, and involving a firm commitment by each player to a specific moral strategy (viz. to the strategy selected by the rule-utilitarian choice criterion) — even if some individual actions prescribed by this strategy, when considered in isolation, should fail to maximize social utility. The most important advantage that rule utilitarianism as an ethical theory has over act utilitarianism lies in its ability to give full recognition to the moral and social importance of individual rights and personal obligations. It is easy to verify that action-by-action maximization of social utility, as required by act utilitarianism, would destroy these rights and obligations. In contrast, rule utilitarianism can fully recognize the moral validity of these rights and obligations precisely because of its commitment to an overall moral strategy, independent of action-by-action social-utility maximization. The paper ends with a discussion of the voter's paradox problem. The conventional theory of rational behavior cannot avoid the paradoxical conclusion that, in any large electorate, voting is always an irrational activity because one's own individual vote is extremely unlikely to make any difference to the outcome of any election. But it can be shown that, by using the principles of rule-utilitarian theory, this paradox can easily be resolved and that, in actual fact, voting, even in large electorates, may be perfectly rational action. More generally, the example of rule utilitarianism shows what an important role the concept of a rational commitment can play in the analysis of rational behavior. (shrink)

Utilitarianism and the Concept of Social UtilityIn this paper I propose to discuss the concepts ofequalityandjusticefrom a rule utilitarian point of view, after some comments on the rule utilitarian point of view itself.Let me start with the standard definitions.Act utilitarianismis the theory that a morally right action is one that in the existing situation will produce the highest expected social utility. (I am using the adjective “expected” in the sense of mathematical expectation.) In contrast,rule utilitarianismis the theory that a morally (...) right action is simply an action conforming to the correct moral rule applicable to the existing situation. The correct moral rule itself is that particular behavioral rule that would yield the highest expected social utility if it were followed by all morally motivated people in all similar situations. (shrink)

Philosophical errors are errors of a very peculiar nature.Obviously, errors occur in the different areas of science, as well as in everyday life. But these errors are sooner or later recognized and exposed, and – most importantly – once they are recognized and exposed, they are essentially rendered harmless, at least for those versed in the respective discipline. A false historical datum, an experimental error or a calculation mistake becomes indefensible as soon as it is noticed.

Ethics deals with two basic problems. One is what to do to have a good life from our own personal point of view, which I shall call the problem of personal wellbeing The other is what to do to have a good life from a moral point of view, which I shall call the problem of morality.

We introduce a new class of values for TU-games with a level structure, called LS-games. A level structure is a hierarchical structure where each level corresponds to a partition of the player set, which becomes increasingly coarse from the trivial partition containing only singletons to the partition containing only the grand coalition. The new values, called Harsanyi support levels solutions, extend the Harsanyi solutions for LS-games. As an important subset of the class of these values, we present the (...) class of weighted Shapley support levels values as a further result. The values from this class extend the weighted Shapley values for LS-games and contain the Shapley levels value as a special case. Axiomatizations of the studied classes are provided. (shrink)

In this paper I investigate the possibility of a dictatorship in the context of Harsanyi's Social Aggregation Theorem. Preliminarily, some propositions about Harsanyi's Theorem are presented using an alternative principle that I name Quasi-strong Pareto, which is the latter part of Strong Pareto. Then I define dictatorship as a requirement that social preference agrees with a dictator's preference or those of members of dictatorial group even if their preferences strictly contradict those of all other people in the society. (...) Conclusively, although in each version of Harsanyi's Theorem with Pareto Indifference, Weak Preference Pareto or Weak Pareto the social utility function may have a form of dictatorship, however if individuals' vNM utility functions are all 'individualistic' and Quasi-strong Pareto is satisfied, then the dictatorship is excluded. (shrink)

1.1 In 1955, John Harsanyi proved a remarkable theorem:1 Suppose n agents satisfy the assumptions of von Neumann/Morgenstern (1947) expected utility theory, and so does the group as a whole (or an observer). Suppose that, if each member of the group prefers option a to b, then so does the group, or the observer (Pareto condition). Then the group’s utility function is a weighted sum of the individual utility functions. Despite Harsanyi’s insistence that what he calls the Utilitarian (...) Theorem embeds utilitarianism into a theory of rationality, the theorem has fallen short of having the kind of impact on the discussion of utilitarianism for which Harsanyi hoped. Yet how could the theorem influence this discussion? Utilitarianism is as attractive to some as it is appalling to others. The prospects for this dispute to be affected by a theorem seem dim. Yet a closer look shows how the theorem could make a contribution. To fix ideas, I understand by utilitarianism the following claims: (1) Consequentialism: Actions are evaluated in terms of their consequences only. (2) Bayesianism: An agent's beliefs about possible outcomes are captured probabilistically. (3) Welfarism: The judgement of the relative goodness of states of affairs is based.. (shrink)

Harsanyi claimed that his Aggregation and Impartial Observer Theorems provide a justification for utilitarianism. This claim has been strongly resisted, notably by Sen and Weymark, who argue that while Harsanyi has perhaps shown that overall good is a linear sum of individuals’ von Neumann-Morgenstern utilities, he has done nothing to establish any con- nection between the notion of von Neumann-Morgenstern utility and that of well-being, and hence that utilitarianism does not follow. The present article defends Harsanyi against (...) the Sen-Weymark cri- tique. I argue that, far from being a term with precise and independent quantitative content whose relationship to von Neumann-Morgenstern utility is then a substantive question, terms such as ‘well-being’ suffer (or suffered) from indeterminacy regarding precisely which quantity they refer to. If so, then (on the issue that this article focuses on) Harsanyi has gone as far towards defending ‘utilitarianism in the original sense’ as could coherently be asked. (shrink)

How should we make interpersonal comparisons of well-being levels and differences? One branch of welfare economics eschews such comparisons, which are seen as impossible or unknowable; normative evaluation is based upon criteria such as Pareto or Kaldor-Hicks efficiency that require no interpersonal comparability. A different branch of welfare economics, for example optimal tax theory, uses “social welfare functions” to compare social states and governmental policies. Interpersonally comparable utility numbers provide the input for SWFs. But this scholarly tradition has never adequately (...) explained the basis for these numbers. John Harsanyi, in his work on so-called “extended preferences,” advanced a fruitful idea. While an ordinary preference is a ranking of outcomes, an “extended preference” is a ranking of individual histories. To say that individual k has an extended preference for history over means something like the following: k prefers to have the attributes of individual i in outcome x, as opposed to having the attributes of individual j in outcome y. Harsanyi’s proposal was to endow individuals with “extended preferences”; to represent such preferences using “extended” utility functions; and to employ such functions, in turn, as the basis for interpersonal comparisons of well-being levels and differences. Harsanyi’s analysis, however, had various gaps and flaws. In this Article, I both diagnose these difficulties, and show how they can be remedied - yielding a viable account of interpersonal comparisons, one sufficient for the needs of the SWF approach. (shrink)

This Article investigates the determinants of dividend policy in firms with concentrated ownership structures. A review of the empirical literature shows that dividend payout ratios are lower in firms with controlling shareholders. We explain this finding as a consequence of the legal rules governing cash distributions, which leave the dividend decision in the hands of the firm insiders, and the lack of monitoring mechanisms for checking the power of controlling shareholders. The analysis of the empirical evidence on dividend policy points (...) to the existence of an unresolved agency conflict between controlling shareholders and outside investors. We conclude that controlling shareholders are currently using the dividend policy to expropriate minority shareholders. (shrink)

This study comparatively examines the dividends behavior in state-controlled firms versus family-controlled firms. With the sample of large industrial firms listed on the Main Board of Hong Kong Stock Exchange, we investigate the dividends payment rates, stability of dividends payment, the effects of firm size, profitability and growth opportunity on likelihood to pay dividends, as well as the concentration of dividend in state-controlled versus family-controlled firms. Based on the findings, we derive some ethical implications of (...) class='Hi'>dividends policy regarding the differences in business ethical behavior, corporate social responsibility, corporate governance, business sustainability, and shareholder activism in state-controlled versus family-controlled firms, as well as the improvement in these respects through cross-listing in Hong Kong. (shrink)

This is a chapter of a collective volume of Rawls's and Harsanyi's theories of distributive justice. It focuses on Harsanyi's important Social Aggregation Theorem and technically reconstructs it as a theorem in welfarist social choice.

In his recent book,Rational Behaviour and Bargaining Equilibrium In Games and Social Situations, John C. Harsanyi devotes a chapter to his new theory of morality, which he calls ‘Critical Rule Utilitarianism’, and which contains his solution to the problem of the interpersonal comparison of utility. After a detailed exposition of his theory, arguments will be presented to show that:there are certain formal difficulties in the solution that he offers which leads to a rejection of the axiom that there is (...) to be agreement between an individualj’s personal preferences and individuali’s (i ≠j) extended utility function out of which the social welfare function is to be constructed; andHarsanyi’s theory of critical rule utilitarianism cannot be accepted as a theory of morality because it presupposes a more fundamental theory in its actual construction. (shrink)

Harsanyi defends utilitarianism by means of an axiomatic proof and by what he calls the 'equiprobability model'. Both justifications of utilitarianism aim to show that utilitarian ethics can be derived from Bayesian rationality and some weak moral constraints on the reasoning of rational agents. I argue that, from the perspective of Bayesian agents, one of these constraints, the impersonality constraint, is not weak at all if its meaning is made precise, and that generally, it even contradicts individual rational agency. (...) Without the impersonality constraint, Harsanyi's two justifications of utilitarianism on the grounds of Bayesian rationality fail. As an alternative, I develop a contractarian framework that is compatible with individual rational agency and Harsanyi's central assumptions, and that allows the derivation of moral conclusions on the grounds of Bayesian rationality. The developed framework offers a novel justification of contractarian ethics and may best be described as a combined version of Harsanyi's equiprobability model and Rawls's original position. (shrink)

In notes to Hegel's Rechtsphilosophie lectures, written around the time of Haiti's 1825 ‘ransom’—the 150 million francs demanded by France to indemnify former slave and plantation owners—we find an uncanny remark. Hegel appears to report on a different ransom, a compensated abolition of slavery in North America that never happened, anticipating an application of the Fifth Amendment's takings clause that US legal scholarship routinely fails to mention. In view of Alan Brudner's enlistment of Hegel as the philosopher ‘uniquely’ able to (...) understand the Fifth Amendment's requirement for compensation for expropriations—a ‘constitutional essential for liberalism’—this paper explores the meaning of these passages in the historical context of the legal abolitions of Hegel's time: feudalism and slavery. The slaveholder indemnities were clearly the unjust ‘dividends’ of the colour line, but their legal foundations and developments in US thought of the nineteenth century also usefully illustrate takings law's foreclosure of political and social transformation through the securitization of value. Reading these histories and Hegel's comments alongside the critical interventions of the black radical tradition, I suggest that Hegel's curious remarks on compensated takings suggest not only a critical divergence from Brudner's understanding of ‘dialogic community’, but a crucial limitation in his field of analysis which pivoted on the denigration of black sovereignty. This paper thus suggests an understanding of US takings law through the shifting understandings of the term ‘ransom’—which for abolitionists such as Frederick Douglass signified not a resolution of slavery, but rather the threat of its perpetuation—and Douglass's elaboration of the pathology of the colour line. (shrink)