Does Collective Rationality Entail Efficiency?

Collective rationality in its ordinary sense is rationality’s extension to groups. It does not entail efficiency by definition. Showing that it entails efficiency requires a normative argument. Game theorists treating cooperative games generally assume that collective rationality entails efficiency, but formulating the reasoning that leads individuals to efficiency, and verifying the rationality of its steps, presents challenging philosophical issues. This paper constructs a framework for addressing those issues and reaches some preliminary results about the prospects of rational agents achieving efficiency in coalitional games. It concludes that only under strong idealizations does collective rationality entail efficiency. 1 Welfare economics formulates idealizations, such as perfect competition, under which markets yield efficient allocations of goods. In a similar spirit, this essay formulates idealizations under which efficiency emerges in coalitional games. These are games in which players may form coalitions and act jointly. Many theorists propose th