ABSTRACT

The relationship between freedom of choice and co-ordination is a central theme in economic theory. Freedom of choice is inherently associated with the multiplicity of preferences and the set inclusion criterion. Multiplicity of preferences suggests a situation of social variety, such that different individual rankings may exist side by side. Set inclusion implies that any given agent is at least as free in the largest opportunity set as s(he) is in the smaller set. The combination of multiple preferences and set inclusion leads to the economist’s riddle: heterogeneous agents are conceived as capable of achieving an effective pattern of interaction (competitive equilibrium) by co-ordinating their respective freedoms of choice (see Arrow 1994; see also Arrow 1986).