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A Rawlsian View of CSR and the Game Theory of its Implementation (Part II): Fairness and Equilibrium

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A RAWLSIAN VIEW OF CSR AND THE GAME THEORY OF ITS IMPLEMENTATION (PART I) A Rawlsian View of CSR and the Game Theory of its Implementation (Part II): Fairness and Equilibrium Working papers Lorenzo Sacconi N.23 August 2010 1 A Rawlsian V iew of CSR and the Game Theory of its Implementation (Part I I): Fairness and Equilibrium1 Lorenzo Sacconi Department of Economics - University of Trento and EconomEtica, Inter university centre of research University Milano - Bicocca, 1 Introduction This is the second part of an comprehensive essay on the Rawlsian view of corporate social responsibility (CSR thereafter) understood as an extended model of corporate governance and objective function, based on the extension of fiduciary duties owed to the sole owner of the firm to all the company stakeholder (for this definition see part I, Sacconi, 2010a) infra). As in the first part, CSR is also understood as a self sustaining institution ? i.e. as a self sustaining system of descriptive and normative beliefs consistent with the equilibrium behaviors performed repeatedly by agents in the domain of action of corporate governance (firms and their stakeholders). But equilibria are multiple in the game representing the strategic interaction among the firm and its stakeholders - modeled as a repeated trust game or ????? ???????? ???????? ???????? ?????? ?Ostrom, 1990). Thus asserting that CSR satisfies the Nash equilibrium condition as an institution is not enough. There is also an equilibrium selection problem. This the place where the Rawlsian social contract (Ralws, 1971, 1993) enters again the picture by performing its main role as normative equilibrium selection device from the ex ante perspective: that is, the ex ante impartial selection of a unique equilibrium amongst the many possible in the repeated trust game involving the firms and its stakeholders. Note that this was its second role previously suggest

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