Fairness – A Thought Experiment Say you need a piece of paper delivered, and you are willing to exchange X amount of value for that service. I answer your call, agree to terms, deliver the paper, and you provide me with the agreed-upon compensation. I imagine we all agree that this constitutes the end of a fair transaction among rational economic actors. Two consensual obligations were created and each subsequently met. No other obligations remain, correct? --- Now imagine that piece of paper is instead a cashier’s check for some arbitrarily large sum of money. You need it delivered to a casino manager in Vegas so that they may place a bet on your behalf. Same as before... I answer your call, agree to terms, deliver the paper, and you provide me with the agreed-upon compensation. The bet hits, and you win big — 10x your money. Do you owe me any additional compensation for "helping" you win the bet? If so, how much? Why? What changed? To be clear — we are not talking about generosity or what you believe should happen. We are talking about the birth of an obligation — what is owed in order to cross the threshold of fairness. --- Now flip it. You lose the bet. The money is gone. Do I owe you anything since I "helped" you lose the bet? Has your answer changed? If so, why? --- We keep going. I deliver more checks for you under similar agreements, more wins... 100x, 1000x, 10000x. At what point — if ever — is a new obligation born? At what point do you owe me compensation beyond what we agreed? And if one of those final bets wipes you out, do I owe you anything? Are your answers changing? If so, why? How much? Based on what? --- Let’s adjust the scenario slightly. You need help with a different kind of bet. Say you bought a bunch of parts, and now you need someone to help you assemble and package some trinkets. I answer your call, agree to terms, assemble the trinkets, and you provide me with the agreed-upon compensation. The trinkets are a huge hit, and your revenue is 10x your costs. Do you owe me any additional compensation for "helping" you win the bet? What if the trinkets flop and no one buys them? Do I owe you anything since I "helped" you lose the bet? Do I have to buy your leftovers? Are your answers different? If so, why? What changed? --- Say I continue to assemble trinkets for you under similar agreements while you build a trinket business... franchise... empire. At what point — if ever — is a new obligation born? At what point do you owe me compensation beyond what we agreed? If your industry dies and you lose it all — how much do I owe you? --- Is the definition of fairness outcome dependent? If so, does it cut both ways? Why or why not? Or is fairness determined ex ante (before the outcome) and achieved solely through the creation and resolution of consensual obligations?
