Gibbard's work was a bombshell. That was very exciting. I didn't know about Satterthwaite's work for a couple of years, but it was very much the same… - Kenneth Arrow

In fact, is is not a mere empirical accident that not all the contingent markets needed for efficiency exist but a necessary fact with deep implications for the workings and structure of economic institutions. Roughly speaking, information about particular events, even after they have occurred, is not spread evenly throughout the population. Two people cannot enter into a contract contingent on the occurrence of a certain event or state if only one of them in fact will know that the event has occurred. A particular example of this is sometimes known as “moral hazard” in the insurance and economic literature. The very existence of insurance will change individual behavior in the direction of less care in avoiding risks.

In this case of unrestricted income distribution, the dimensionality of the issue space is the same as the number of individuals. Thus, as Tullock argues, political resolution of distributional issues is apt to be possible only if only a few parameters of the income distribution are under consideration, not the whole distribution. Why this restriction of the scope of choice should occur is not easy to explain on simple economic grounds. On the other hand, the restriction does conform to the long-standing view of writers on ethics, of whom Kant is perhaps most conspicuous, that decisions on distribution ought to be made as if by an impartial observer, who considers then only the mean, a measure of inequality, and perhaps one or two further parameters characterizing the income distribution, but not specifically who gets what. If voters acted like Kantian judges, they might still differ, but the chances of coming to an agreement by majority decision would be much greater than if voters consulted egoistic values only. Does this suggest that ethics may have survival value for political systems and therefore descriptive as well as prescriptive significance?

In this aspect, the case for democracy rests on the argument that free discussion and expression of opinion are the most suitable techniques of arriving at the moral imperative implicitly common to all. Voting, from this point of view, is not a device whereby each individual expresses his personal interests, but rather where each individual gives his opinion of the general will.