The informational basis of the theory of fair allocation

The theory of fair allocation is often favourably contrasted with the social choice theory in the search for escape routes from Arrow’s impossibility theorem. Its success is commonly attributed to the fact that it is modest in its goal vis-à-vis social choice theory, since it does not aspire for a full-fledged ordering of options, and settles with a subset of “fair” options. We show that its success may rather be attributable to a broadened informational basis thereof. To substantiate this claim, we compare the informational basis of the theory of fair allocation with the informational requirements of social choice theory. JEL Classification Numbers: D63, D71. ∗This paper is derived from an earlier draft of our paper entitled “Informational requirements for social choice in economic environments”. The authors thank A. Trannoy for comments, and participants at seminars in Cergy and Rochester, and the 5th International Meeting of the Society for Social Choice and Welfare in Alicante. Financial support from the Ministry of Education of Japan through Grant-in-Aid No. 10045010 (“Economic Institutions and Social Norms: Evolution and Transformation”) is gratefully acknowledged. †CATT, THEMA, IDEP, University of Pau, Av. du Doyen Poplawski, 64000 PAU (France). Email: [email protected] ‡Institute of Economic Research, Hitotsubashi University, Kunitachi, Tokyo 186-8603 (Japan). Email: [email protected] §Faculty of Economics, Hitotsubashi University, Kunitachi, Tokyo 186-8601 (Japan). Email: [email protected]