Experimental Social Choice: The Impact of Nosy Preferences on Efficiency

A foundational paradox in social choice theory is that liberalism (freedom of action) and Pareto efficiency, the standard in evaluating economic outcomes, can conflict with each other (Sen 1970). We capture this tension in a series of sequential Battle of the Sexes game experiments. We find that most individuals are willing to waive rights to achieve efficient outcomes. In addition efficiency is higher when participants may claim new rights than when they may relinquish them or when only one player possesses them. This evidence may help resolve the tensions between efficiency and liberty that lie at the heart of social choice and political philosophy.