140 - Nash point

Summary

In explaining both the meaning of the difference principle and its choice by the parties in the original position, Rawls treats it as the solution to what is often called a bargaining game. He then contrasts the solution represented by the difference principle with other proposed solutions, in particular that of classical utilitarianism (what he calls the Bentham point) and that proposed by John Nash, the Nash point (JF 62–63).

In a bargaining game, players must divide up a pay-off between them, which they forfeit if they cannot agree. The size of the pay-off can be dependent on the agreement reached. Bargaining games capture essential features of social cooperation that raise the problem of distributive justice in the first place: social cooperation produces a surplus, but the size of the surplus is dependent on the rules governing the cooperation including how the surplus is to be divided.

In a bargaining game, any agreement that distributes all of the surplus will be what is called a Nash equilibrium: once adopted, there is no way for any player to improve her outcome by unilaterally changing her actions. The question is then which equilibrium point should be chosen. The difference principle can be thought of as a rule for choosing an outcome to the bargaining game. It says to choose the outcome that maximizes the pay-off to the worst off. Classical utilitarianism also yields a principle for choosing an outcome: it says, choose the outcome that maximizes the sum of the pay-offs, understood as utilities.