The Social Efficiency of Fairness

Abstract

Property rights provide incentives to create information but they also provide incentives to hoard it prior to the award of protection. All-or-nothing rights, in particular, limit prior sharing. An unintended consequence is to slow, not hasten, forward progress when innovation hinges on combining disparately owned private ideas. In response, we propose a solution based on a reward definition of "fairness," that unblocks innovation by increasing willingness to share private knowledge.We present four arguments. First, we show that fairness can increase the rate of innovation. Welfare can improve both in the absolute sense of enabling new projects and in the relative sense of reordering the social sort order of which projects agents prefer to undertake. Second, in contrast to models of "other regarding" preferences, we show how self-interest alone is sufficient to justify fairness. Third, we show how this problem is more acute for information than for tangible goods. Fourth, we argue that liability rather than property rules can be more conducive to innovation based on information reuse and recombination.JEL Class: A13, D23, D45, D8, K11, K12, O31, O34

Designing Data Governance in Platform Ecosystems

“…Fairness results in more participation and ideas, and after all it leads to new innovation [4]. Moreover, it makes more wise and productive use of data in PEs [34]. Simple presents that data governance in PEs should be designed and implemented as efficiently and effectively as possible by making its structure simple.…”