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(10 comments) SHARE Friday, January 11, 2013 The Hierarchy Machine: Authority is the Enemy of Rationality
This is a classic example of an externality: That is, the positive and negative consequences of a decision are not fully borne by the person making it; or put another way, the person who bears the consequences of a decision lacks the authority to decide. Under such circumstances, decisions that optimize the utility of a rational individual may result in suboptimal utility for the system as a whole.