Veil Of Uncertainty Research Articles

Armutsexternalitäten: Verfassungsökonomische Rechtfertigung für eine kollektive Grundsicherung

Abstract This paper analyzes the institution of benefit payments from the constitutional economics point of view. Benefit payments cannot be legitimized only by the veil of uncertainty about the personal future income position. From the constitutional economics perspective, they are only justified if externalities of poverty as a genuine public good problem are taken into account. A system of public benefit payments raise up two problems: first it has to overcome the problem of free-riding with regard to transfer payments, and secondly it should not provide incentives for the beneficiary to restrain the own efforts to work. Hence a double commitment is necessary: On the one hand, this commitment must regulate, in which way a citizen is engaged in the financing transfer payments, and on the other hand it has to include obligations for the potential recipients of the transfer payments to immediately return to working life.

Doch keine Freizügigkeit für Arme? – Zur Notwendigkeit einer Abwägung unterschiedlicher konstitutioneller Interessen

Abstract In reply to Jörg Markt and Gerhard Schick in this volume, this paper argues for a different view on social assistance and migration. First, this article will present some methodological conditions for constitutional contracts. Lacking empirical testability, the method of constitutional economics particularly needs the revelation of constitutional interests before evaluating alternative rules. By testing the described alternative rules of migration in the face of potential constitutional interests, it will be shown that no rule discussed meets all targets. The reader has to be aware that Märkt/Schick decided to meet the target of free migration for welfare recipients and thereby missed some essential targets of social assistance. In this paper it is questioned, if the objective of free migration for welfare recipients is as important as it looks at first glance. It is argued that liberty as a constitutional interest can be restricted by rational constitutional voters. Behind the veil of uncertainty it might be necessary to limit the external diseconomy from free-riding welfare recipients in social assistance schemes or the external diseconomy from the poor in the utility-interdependence sense. If the reader comes to share this point of view, there is no need to harm the original constitutional interests related to social assistance.

Precommitment, the Timeless Perspective, and Policymaking from Behind a Veil of Uncertainty

Woodford (1999) develops the notion of a “timelessly optimal” pre-commitment policy. This paper uses a simple business cycle model to illustrate this notion. We show that timelessly optimal policies are not unique and that they are not necessarily better than the time-consistent solution. Further, we describe a method for constructing optimal precommitment rules in an environment where the policymaker does not know the initial state of the economy. This latter solution is useful for characterizing the benefits policymakers extract through exploiting initial conditions. • The views expressed in this paper are those of the author and do not necessary reflect those of

Institutional uncertainties in international fisheries management

Around the world, many commercial fisheries are in crisis. The failure of the traditional management models, centered on calculations of maximum sustainable yields (MSY) from individual species or stocks has complicated efforts to come to terms with this situation. A growing emphasis both on interdependencies in large marine ecosystems (LMEs) and on the non-linear or chaotic changes that are prominent features of these systems highlights the biophysical uncertainties affecting fisheries management. Less familiar is the proposition that efforts to manage fisheries are affected by institutional uncertainties as well. These uncertainties stem from: (1) contradictions embedded in fisheries regimes as an outgrowth of institutional bargaining, (2) vague or ambiguous formulas arising from the pressures of negotiation processes, (3) the complexity of specific institutional arrangements, (4) gaps between regimes on paper and regimes in practice, (5) compliance problems, (6) linkages between individual fisheries regimes and other international institutions, and (7) limited capacity to forecast how fisheries regimes will evolve over a period of time. Not all institutional uncertainties are bad. The existence of a thick `veil of uncertainty,' for example, may contribute to the development of successful fisheries regimes by giving participants incentives to pay attention to considerations of fairness. But any effort to manage international fisheries effectively must reckon with the existence of institutional as well as biophysical uncertainties in this realm.

The Veil of Uncertainty Unveiled

A central assumption of constitutional economics is that in the process of constitutional decisionmaking the players' uncertainty about their post-constitutional positions (“veil of uncertainty”) serves the useful purpose of making unanimity and fairness at the constitutional level more rather than less probable. The paper argues that this assertion is false if the conventional assumption holds true that social contracts are threatened by a prisoners' dilemma incentive structure. By means of a simple two-person game-model it is shown that, if players are fully aware of all their partial interests, agreement on a Pareto-efficient rule will be the iterated dominance equilibrium of the game played at the constitutional level. A veil of uncertainty cannot do better. It may, however, induce disagreement or discrimination, if the prisoners' dilemma violates the cardinal property often assumed. This raises the question why the choice of rules which typically takes place in full knowledge of the players' post-constitutional positions poses so many problems although, from a theoretical point of view, unanimity seems so easy to achieve. Finally, it is examined, if there is any salutary role the veil of uncertainty is able to play in view of a post-constitutional prisoners' dilemma.

Calculation of Self-Interest and Constitutional Consensus: The Role of Ideology

Constitutional political economy's veil of uncertainty prevents citizens from identifying their specific interests under political rules and facilitates agreement on rules by moving all individuals to an “average” position. But the calculation of self-interest in such settings is not straight-forward; citizens require a model of how the economy works to predict the effect of rules on welfare. Political ideologies typically supply such models. Citizens subscribing to different ideological models anticipate differential treatment under a given constitutional rule, breaking down the ability of the veil of uncertainty to achieve consensus. Constitutional consensus is unlikely in the absence of ideological consensus.

A Comment on Müller's “Unveiling of the Veil of Uncertainty”

This comment replies to the assertion by Muller (1998) that a rational and self-interested individual faced with a thick veil of uncertainty may not, as a result, vote for a fair rule. It is argued that if such an individual is reasonably assumed to behave as if he/she were risk-averse then he/she is more likely to vote for such a rule.

Risk-Aversion in Constitutional Choice: Reply to Kyriacou

In his comment on my article on the possibility of discriminatory and non-consensual decsionmaking under Buchanan's “veil of uncertainty” (Muller 1998) Andreas Kyriacou proposes to take the players to be “quasi-risk averse” in order to secure fair and unanimous results at the constitutional level. As analytical tools of incorporating this premise into my model he not only suggests to assume that the individuals weigh losses higher than gains but also to take them as being rational maximiners. In this reply to his comment it is argued that both these points are inadequate to weaken my case against the veil's ability to guarantee unanimity and fairness of constitutional decisionmaking in view of a post-constitutional prisioners dilemma.

International cooperation behind the veil of uncertainty: the case of transboundary acidification

The complexities of international environmental problems are only poorly understood. Hence, decision makers have to negotiate about abatement measures even though they do not know the 'true' model of the ecological system and have only a rough idea about the costs and benefits of their action. It will be analysed to what extent this kind of 'model uncertainty' – where players do not only have incomplete information about the payoff functions of the other players, but also about their own payoff function – affects the prospects of international cooperation. Using a simple game-theoretic model, it is shown how countries can use the veil of uncertainty to hide their distributional interests. The arguments are based on a deviation from the common prior assumption, which seems particularly questionable in a setting comprising various countries with different cultural and scientific backgrounds. Finally the model will prove useful to quantitatively and qualitatively illustrate the central role of model uncertainty in the negotiations of the first Sulphur Protocol signed to combat transboundary acidification.

The experience of dementia: a review of the literature and implications for nursing practice.

This paper explores the early experience of dementia when the veil of uncertainty that surrounds the diagnosis of this condition is lifted. Consideration will also be given to the impact of dementia on carers and the service demands that are created. In the UK alone there are estimated to be 636,000 people living with dementia, with this figure rising to just under 900,000 by the year 2021. In the USA the projected number of people with Alzheimer's disease is expected to be 9,000,000 by the year 2040 Despite a wealth of social and gerontological research on the impact of dementia upon family carers, service responses and policy initiatives are fragmented because dementia is excluded from some important recent initiatives, such as the Mental Health Task Force. Current services and interventions focus predominantly on the later stages of dementia, when a meaningful perspective of the person with dementia is difficult to obtain. Nursing has a relatively long history of caring for people with dementia and their family carers. The paper will also consider the contribution of nursing and nursing research to the field and explore additional avenues for service intervention and education.

Privatization and Restructuring: An Incomplete-Contract Approach

Introduction One of the main problems of privatization in transition economies is the non-viability of many industrial firms which are to be privatized: unless the firm is restructured. it should be closed down because it is not worthwhile to run the firm in a market - economic environment. Now consider the privatization of a single enterprise which can be made viable by appropriate. restructuring activities. This raises the following questions : should it be the government which restructures or the private buyer? Or should both share in the task of restructuring? And if so, in which way should they share in this task? Moreover: what is the best sequencing of restructuring and privatization? These questions are addressed in the present paper. Let us assume that for political reasons the government wants to privatize quickly. This makes it impossible to wait until the value of the firm is precisely known. At least part of the restructuring must be performed under a veil of uncertainty. These restructuring efforts of the government or of the private buyer are faced with a hold-up problem. Restructuring is firm-specific : it refers to the particular firm in question and cannot be resold to anybody else. Hence the restructuring investments have the same properties as the relationshipspecific investments in the Williamson1 (1985) setting. Restructuring efforts are non-verifiable before a court. Moreover, the privatization contract cannot be made contingent on the value of the firm. At the moment of contracting, there is simply too much uncertainty about this value. Therefore, only an incomplete contract can be written at the exante stage. The Williamson-type hold-up problem arises because the division of net surplus from the sale of the firm cannot be fixed ex ante and the contracting parties cannot be prevented from renegotiating the initial contract terms when the value of the firm finally had become known. At the moment of renegotiation, the restructuring costs are sunk; hence, they do not influence the division of the net surplus from privatization. The parties anticipate that their restructuring efforts will not be rewarded at the renegotiation stage and underinvest. The hold-up problem in incomplete contracts has recently been addressed by quite a few excellent papers. Hart and Moore2 (1988) developed a formal framework of the problem in a model where one unit of a homogeneous good may be traded between a private seller and a private buyer who both engage in relationship-specific investments prior to the production of the good. Hart and Moore assume at-will contracts. This means that, in case of legal disputes between the parties, the court is unable to decide which; party is responsible for an eventual breach of the initial contract. Accordingly, the inclusion of breach penalties into the initial contract is unfeasible; the completion of the project after the initial innovation phase is a voluntary decision of both agents. In this setting. Hart and Moore proved that there is no solution to the holdup problems: there will always be underinvestment in the relationship-specific efforts. It is impossible in their model to achieve the first best, except in some singular cases. Further papers like Chung (1991)3, Aghion-Dewatripont-Rey (1994)4 and Noldeke-Schmidt (1995)s switched from the HartMoore setting to specific performance contracts or to option contracts, respectively, and showed that then the first best can be achieved. All of these papers deal with private trade where a private seller and a private buyer enter a long-run relationship which consists of an innovation stage and a production stage. In the present paper this setting is transferred to privatization. The innovation stage is identified with investments under certainty which the buyer has to carry out in order to make the firm run. In a sense, we assume that the firm is 'produced' by the private buyer since the former socialist regime has only left an empty shell which must be filled with life in order to survive in a market-economic environment. …

An economic theory of persuasion

In the real world, we can observe various persuasive activities, including political advertising. This paper has tried to develop an economic theory of persuasion in collective decision-making. Section 2 has discussed how individuals persuade the median voter in collective decision-making concerning the social supply level of a public good within the median voter model. Our model shows that persuaders attempt to persuade the median voter to move his optimum to the level which maximizes their expected net gain of persuasion, by using the persuasive way that they believe to certainly be able to persuade him to do so. Section 3 has explored a solution using persuasion for externalities concerning smoking in a society of two persons. We have considered persuasive activities in three cases. First, a rule permitting smoking is already established. Second, the smoker is prohibited from smoking by another rule. Third, there is no prior rule governing smoking. The last case is interesting. We have made clear that the equi-total sacrifice rule would be mutually acceptable behind the veil of uncertainty, and explored the persuasive activities under the rule. Our model, however, has many limitations. All functions in the model are linear. Applying the median voter model implies that we have neglected completely the behavior of governmental decision makers. People's persuasive activities depend on the probability function μij, but we have not explored how people formulate the function. Furthermore, our model has assumed that the identity of the persuadee for a persuader is not uncertain but fixed. Consequently, the problems that remain to be explored are as follows:

Costituzione e politica economica

Abstract Wicksell deserves the designation as the most important precursor of modern public-choice theory because we find in his 1896 dissertation all three of the constitutive elements that provide the foundations of this theory: methodological individualism, homo oeconomicus and politics-as-exchange. As the basic Wicksellian construction is shifted to the choice among rules or constitutions and as a veil of uncertainty is utilized to facilitate the potential bridging of the difference between identifiable and general interest, the research program in political economy merges into that of contractarian political philosophy, both in its classical and modern variations. Because of his failure to shift his own analytical construction to the level of constitutional choice, Wicksell was confined to evaluation of the political process in generating current allocative decisions. Pure distributional questions remain outside the Wicksellian evaluative exercise. With the shift to the constitutional stage of politics, however, this constraint is at least partially removed. The whole contractarian exercise remains empty if the critical dependence of politically-generated results upon the rules that constrain political action is denied. Normatively, the task for the constitutional political economist is to assist individuals, as citizens who ultimately control their own social order, in their continuing search for those rules of the political game that will best serve their purposes, whatever these might be.