Post-AGI Economies: Autonomy and the First Fundamental Theorem of Welfare Economics

2026-04-22

AI Summary

This study addresses the challenge posed by heterogeneous levels of autonomy among artificial agents in a post-AGI economy to the assumption of full autonomy underpinning the First Fundamental Theorem of Welfare Economics. The paper introduces the concept of an “autonomy-complete competitive equilibrium,” reestablishing the relationship between competitive equilibrium and Pareto efficiency within a minimal general equilibrium framework. This is achieved by incorporating welfare functions conditioned on autonomy, mechanisms for allocating welfare status, and institutional arrangements for delegated accounting and verification. The analysis establishes sufficient conditions for achieving Pareto efficiency in environments populated by agents with diverse autonomy levels and demonstrates that classical results are recovered as a limiting case when autonomy approaches zero. The framework thus provides a theoretical foundation for welfare evaluation and policy design in the post-AGI era.

Technology Category

• Game Theory and Economic Paradigms: Mechanism Design
• Multiagent Systems: Mechanism Design
• Philosophy and Ethics of AI: Artificial General Intelligence

Application Category

• Economics, Online Markets and Human Computation: Fairness, privacy, and diversity in economic environments
• Responsible Web: Machine-in-the-loop, human agency and autonomy
• Semantics and Knowledge: Data modeling to support human-machine intelligence, including LLMs agents, intelligent system behavior, explanations, and user-friendly interactions

Abstract

The First Fundamental Theorem of Welfare Economics assumes that welfare-bearing agents are autonomous and implicitly relies on a binary distinction between autonomy and instrumentality. Welfare subjects are those who have autonomy and therefore the capacity to choose and enter into utility comparisons, while everything else does not. In post-AGI economies this presupposition becomes nontrivial because artificial systems may exhibit varying degrees of autonomy, functioning as tools, delegates, strategic market actors, manipulators of choice environments, or possible welfare subjects. We argue that the theorem ought to be subject to an autonomy qualification where the impact of these changes in autonomy assumptions is incorporated. Using a minimal general-equilibrium model with autonomy-conditioned welfare, welfare-status assignment, delegation accounting, and verification institutions, we set out conditions for which autonomy-complete competitive equilibrium is autonomy-Pareto efficient. The classical theorem is recovered as the low-autonomy limit.

Problem

• autonomy
• welfare economics
• AGI
• Pareto efficiency
• instrumentality

Innovation

• autonomy
• post-AGI economies
• welfare economics
• Pareto efficiency
• general equilibrium