Abstract
The purpose of the present paper is to embed the compensation principle due to N. Kaldor into some more general framework so as to discuss conflict resolving by compensation for social as well as individual decision making. Kaldor’s intention in (1939) was to show that the classical argument for free trade does not require interpersonal comparison of utilities. In section 2 Kaldor’s compensation principle is presented in detail together with some of its criticism. In contrast to the criticism the formulation of Kaldor’s principle as given in this section does not involve utilities. This formulation then leads to a general concept of compensation presented in section 3. Compensation thereby is described by an equivalence relation on the set of alternatives. A conflict among alternatives occurs when there are (at least two) preferences that point in different directions. The conflict resolution hoped for is portrayed by the factor relation obtained by taking the conjunction of the preferences modulo the equivalence relation.
The author would like to thank T. Scitovsky and A. P. Thirlwall for valuable comments.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Ainslie, G. (1986), ‘Beyond microeconomics. Conflict among interests in a multiple self as a determinant of value,’ in Elster (1986).
Arrow, K. J. (1963), Social Choice and Individual Values (New Haven and London: Yale University Press) 2nd edn.
Elster, J. (ed.) (1986), The Multiple Self (Cambridge: Cambridge University Press).
Fishburn, P. C. (1987), Interprofile Conditions and Impossibility (Fundamentals of Pure and Applied Economics, vol. 18) (Chur, London, Paris, New York: Harwood Academic Publishers).
Gorman, W. M. (1955), ‘The intransitivity of certain criteria used in welfare economics,’ Oxford Economic Papers, 7.
Hicks, J. R. (1940), ‘The valuation of social income,’ Economica, 26.
Hogarth, R. M., and Reder, M. W. (eds) (1987), Rational Choice. The Contrast between Economics and Psychology (Chicago and London: The University of Chicago Press).
Jahn, J. and Krabs, W. (eds) (1987), Recent Advances and Historical Development of Vector Optimization (Berlin: Springer-Verlag).
Kaldor, N. (1939a), ‘Welfare propositions of economics and interpersonal comparisons of utility,’ Economic Journal, 49.
Kaldor, N. (1939b), ‘A comment,’ Review of Economic Studies, 14.
Krause, U. (1973), ‘Analyse und Synthese von Präferenzen,’ Operations Research Verfahren/Methods of Operations Research, 15.
Krause, U. (1987), ‘Hierarchical structures in multicriteria decision making,’ in Jahn and Krabs (1987).
Robbins, L. C. (1938), ‘Interpersonal comparison of utility, a comment,’ Economic Journal, 48.
Samuelson, P. A. (1950), ‘Evaluation of real national income,’ Oxford Economic Papers, 2.
Scitovsky, T. (1941), ‘A note on welfare propositions in economics,’ Review of Economic Studies, 9.
Sen, A. K. (1970), Collective Choice and Social Welfare (San Francisco: Holden-Day).
Stadtler, W. (1987), ‘Initiators of multicriteria decision optimization,’ in Jahn and Krabs (1987).
Steedman, I. and Krause, U. (1986), ‘Goethe’s Faust, Arrow’s possibility theorem and the individual decision-taker,’ in Elster (1986).
Takayama, A. (1972), International Trade. An Approach to the Theory (New York: Holt, Rinehart & Winston).
Yu, P. L. (1985), Multiple-Criteria Decision Making (New York and London: Plenum Press).
Editor information
Editors and Affiliations
Copyright information
© 1991 Edward J. Nell and Willi Semmler
About this chapter
Cite this chapter
Krause, U. (1991). On the Resolution of Conflicts by Compensation. In: Nell, E.J., Semmler, W. (eds) Nicholas Kaldor and Mainstream Economics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-10947-0_6
Download citation
DOI: https://doi.org/10.1007/978-1-349-10947-0_6
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-10949-4
Online ISBN: 978-1-349-10947-0
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)