Does rational bargaining yield a social contract that is efficient and so inclusive? A core allocation, that is, an allocation that gives each coalition at least as much as it can get on its own, is efficient. However, some coalitional games lack a core allocation, so rationality does not require one in those games. Does rationality therefore permit exclusion from the social contract? I replace realization of a core allocation with another type of equilibrium achievable in every coalitional game. Fully (...) rational agents coordinate the pursuit of incentives so that equilibria of this type are efficient. They adopt a social contract that is efficient and inclusive. (shrink)

Collective rationality in its ordinary sense is rationality’s extension to groups. It does not entail efficiency by definition. Showing that it entails efficiency requires a normative argument. Game theorists treating cooperative games generally assume that collective rationality entails efficiency, but formulating the reasoning that leads individuals to efficiency, and verifying the rationality of its steps, presents challenging philosophical issues. This paper constructs a framework for addressing those issues and reaches some preliminary results about the prospects of rational agents achieving efficiency (...) in coalitional games. It concludes that only under strong idealizations does collective rationality entail efficiency. (shrink)

Journal of Social Philosophy, EarlyView.

Kahneman, Knetsch, and Thaler's [. Experimental tests of the endowment effect and the Coase theorem. Journal of Political Economy, 98, 1325–1348] experiment on the Coase theorem disrupted a s...