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Abstract

Frequent violations of fair principles in real-life settings raise the fundamental question

of whether such principles can guarantee the existence of a self-enforcing equilibrium in a

free economy. We show that elementary principles of distributive justice guarantee that a

pure-strategy Nash equilibrium exists in a finite economy where agents freely (and non-

cooperatively) choose their inputs and derive utility from their pay. Chief among these

principles is that: 1) your pay should not depend on your name; and 2) a more productive

agent should not earn less. When these principles are violated, an equilibrium may not exist.

Moreover, we uncover an intuitive condition|technological monotonicity|that guarantees

equilibrium uniqueness and efficiency. We generalize our findings to economies with social

justice and inclusion, implemented in the form of progressive taxation and redistribution,

and guaranteeing a basic income to unproductive agents. Our analysis uncovers a new

class of strategic form games by incorporating normative principles into non-cooperative

game theory. Our results rely on no particular assumptions, and our setup is entirely non-

parametric. Illustrations of the theory include applications to exchange economies, surplus

distribution in a firm, contagion and self-enforcing lockdown in a networked economy, and

bias in the academic peer-review system.