The Efficiency Problem, the Distribution Problem, and a Possible Solution

Abstract

1. The Efficiency of the Decentralized Development of a Nonconflictual Team. If an organism, biological or social, lacks one of its vital organs, the organism dies before it reproduces. The organism survives to reproduction only if all of its vital organs survive. Therefore, no conflict exists among the vital organs. They all live or die together. In decision-theoretic terms, the vital components of an organism form a nonconflictual team; they all share the same objective. This absence of conflict substantially simplifies the development of the organism. As shown in Appendix A.2 at the end of this chapter, even without the costly sequence of status-determinations that characterizes ordinary cooperative interaction (Appendix B.l), each vital action is a narrowly rational choice; each actor unconditionally adopts an allocatively efficient action. An “invisible hand” thus inexorably guides the selfinterested decentralized decisions of all vital decisionmakers to a social optimum.