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Definitions used across the website’s economics, governance, finance, and public-policy research.

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A

Abnormal returns: Investment returns above (or below) what a benchmark or risk model would predict for that security over the period — the 'alpha' left after known risk factors are removed.
Alpha: In finance, alpha is the return an investment earns above what its risk alone would predict — the extra a stock delivers that a standard risk model cannot explain. If a model says a stock should return 8% for its risk and it returns 11%, the 3% is alpha. In the asset-pricing tests here, 'no alpha' means a portfolio's returns are fully accounted for by known risk factors, with nothing left over.
Amartya Sen: Economist and philosopher who argued that welfare judgments can require information beyond utility or income, including freedoms, capabilities, and distribution. Missing System Theorem asks a narrower information question about a declared party-payoff input: when two cases have the same input and different system welfare, that input alone does not identify W. Sen is an important predecessor in the study of informational bases, while the MST proposition has its own assumptions and proof.
Arrow's impossibility theorem: Kenneth Arrow's result (1951) showing there is no perfect way to combine many individuals' rankings into a single social ranking without giving up some basic fairness condition — turning many preferences into one collective choice always requires trade-offs or value judgments. It is the reason aggregate welfare figures are planner-relative rather than objective.

B

Basis point: One hundredth of a percentage point (0.01%). 200 basis points means 2 percentage points.
Benford's Law: An empirical statistical regularity about the distribution of leading digits in many real-world datasets — cited, like Zipf's Law, as an example of a pattern called a 'law' because it is widely observed before it is formally derived.
Bernheim-Rangel framework: A behavioral model of addiction as cue-triggered, state-dependent choice (Bernheim and Rangel, 2004): information absorbed in a 'cold' state has no effect once an environmental cue triggers the 'hot' state — which is why disclosure alone cannot change addicted behavior at scale.
Budget balance: A mechanism is budget-balanced when the transfers among participants net to zero, so it needs no outside subsidy to run.

C

CAPM: Capital Asset Pricing Model — the standard finance model that prices an asset by how much risk it adds to a market portfolio.
Capture-sensitive: A number is capture-sensitive when regulatory capture can move it through its own inputs. The welfare figures are built from shadow prices — the assumed worth of a life, of clean air, of a stable climate — and those prices are set by institutions the harming industry may have captured. A captured price-setter can value the harm too low, so the measured welfare loss comes out understated. The weak point is the input: you can shrink the bill not by causing less harm but by capturing whoever decides what the harm is worth. (The welfare-ledger paper calls this the 'capture-in-the-input problem.')
Career concerns: The incentive created when a person's future pay and promotion depend on how evaluators judge them, pushing them to act as evaluators expect rather than as the facts warrant.
Cheapest-cost-avoider: Legal scholar Guido Calabresi's rule (from accident law): responsibility for a harm should fall on whichever party could have prevented or reduced it at the lowest total cost. Used across the seven System Portage lanes to pick which actor should move.
Choice architecture: The deliberate design of how options are presented to a decision-maker — defaults, ordering, framing — which shapes choices without removing them.
Coasian bargaining: The idea, from economist Ronald Coase, that if property rights are clear and bargaining is cheap, the people affected by a harm can negotiate a fix among themselves — a factory and the downstream fishermen striking their own deal over pollution — without a regulator stepping in. It breaks down when there are too many affected parties to get to the table, or when the harmed party (like the public at large) has no seat at all.
Collective-action problem: Mancur Olson's point (1965): when a benefit is spread thinly across many people, each individual's stake is too small to justify the effort of organizing, so a diffuse group fails to act even when collective action would pay.
Common-pool resources: Shared resources — fisheries, aquifers, forests, grazing land — that many parties can draw from and that no single party owns, which makes them prone to overuse. The setting for Ostrom's self-governance work.
Comparative statics: Working out how an outcome changes when you change one input and hold everything else fixed — the economist's 'what happens to X if Y goes up?' For example, how the corrective charge should change if the estimated harm doubles. It is about the direction and size of a response, not a single fixed number.
Competitive equilibrium: A market state in which prices balance supply and demand across all goods and no participant can do better by acting differently at those prices.
Complete markets: An idealized economy where there is a market — a price you can buy and sell at — for every possible outcome and risk, including insurance for every contingency. In that limit nothing is left unpriced, so competitive markets reach fully efficient outcomes. Real economies are never complete: there is no market in 'system welfare' itself, which is why the harm slips through.
Congestion game: A situation where players share a resource and each one directly feels the crowding — rush-hour traffic, where every extra driver on your road slows your own commute; a packed beach; a shared wifi network. The 'system cost' (congestion) is already inside each player's own payoff, so nothing is hidden the way it is in a Hollow Win.
Contra account: An accounting entry that offsets another — a deduction line booked against a headline figure so the total is reported net of it. System-Welfare-Adjusted GDP subtracts a system-welfare contra account from GDP.
Corollary: A result that follows immediately from a theorem already proved — a direct consequence you get almost for free once the main result is in hand.
Corrosive Lose-Win: The (0,0,1) outcome: the mirror of Corrosive Win-Lose — the second party gains while the first party and the system both lose.
Corrosive Win-Lose: The (0,1,0) outcome: one party gains while the other party and the system both lose — private gain paid for out of both the counterparty and the shared system.
Cost of capital: What a firm pays to raise money: interest on its debt (cost of debt), the return equity investors demand (cost of equity), and the blended average of the two (weighted average cost of capital, or WACC).
Counterfactual: What would have happened under the road not taken — here, the honest report that was never filed; because it is never observed, no contract can reward it.
Covariance: A measure of whether two things move together. Positive covariance means when one rises the other tends to rise too; negative means they move in opposite directions; near zero means they are unrelated. In finance it matters because assets that move together concentrate risk — one shock hits them all at once.

D

Deadweight loss: The value that simply vanishes — gains from trades that never happen — when a market is distorted. If a monopoly or a price-fixing scheme pushes prices above the competitive level, some buyers who would gladly have paid the true cost are priced out; those mutually beneficial trades don't occur, and that lost value is deadweight loss. No one captures it; it is destroyed.
Decision Accounting: A management system for creating permanent, reconstructable records of consequential decisions so organizations can review what was decided, learn from outcomes, and improve future decisions.
DORA: The EU Digital Operational Resilience Act — the European regulation setting information-and-communications-technology risk and resilience requirements for financial firms, with personal accountability for senior managers.

E

Economic rent: A return a party earns purely from an advantage others lack, above what the activity costs. Here, the one-time edge the first firm to disclose its system-welfare impact enjoys, which fades once disclosure is mandatory.
Endogenous: Arising from within a system's own workings or incentives rather than imposed from outside — an endogenous result is a consequence of the setup, not a hidden input.
Ex ante: Before the fact — assessed or committed to in advance, before the outcome is known. Contrast ex post.
Ex post: After the fact — assessed once the outcome is known. A misreport detected ex post is caught after the decision and its results are in.
Exogenous: Imposed on a system from outside it — for example, a price set by an outside planner. Contrast endogenous.
Experience goods: Goods whose quality is known only after use (a meal, a service). Contrast search goods, verifiable before purchase.
Externality: A cost (or benefit) from a transaction that lands on someone who was not part of it. When a factory pollutes a river, the deal between the factory and its buyers works fine for both of them, but the fishermen downstream bear a cost nobody at the table paid for — that uncounted cost is a negative externality. Externalities are the classic reason a privately good deal can still harm the wider world.

F

Fama-French-Carhart four-factor model: A standard finance model (abbreviated FFC4) that explains a stock's returns using four risk factors: the overall market, company size (small vs. large firms), value (cheap vs. expensive stocks), and momentum (recent winners vs. losers). Named after economists Fama, French, and Carhart. Researchers 'control for FFC4' to check whether a new signal — here, welfare-beta — moves returns beyond these well-known factors, or is just repackaging them.
FASB: The Financial Accounting Standards Board — the body that writes the accounting rules US companies follow in their financial statements. Its international counterpart is the IASB.
First Welfare Theorem: The first of the two Welfare theorems: every competitive-market equilibrium is Pareto efficient. It holds only when markets are complete and there are no unpriced externalities — the condition MST identifies as generally unmet for system welfare.
Fiscal Capture: When a government's own revenue depends on the system-degrading industry, the government behaves like a party to the Hollow Win rather than a referee — enforcement shrinks its own tax base.
Fiscal decoupling: Reforming a government's finances so public revenue no longer depends on a harmful industry, removing the state's built-in incentive to protect that industry's revenue. The repair when fiscal capture is the mechanism.
Flow versus stock: A flow is an amount measured per period (harm per year); a stock is a cumulative total accumulated over time (a multi-year cleanup bill). Dividing a stock by an annual flow mixes units and is not a valid annual ratio.
Fundamental Theorems of Welfare Economics: See Welfare theorems — the two results (First and Second) that competitive markets, under strong conditions including complete markets and no unpriced externalities, reach efficient outcomes.

G

Game-Change: A rule change that makes a destructive game produce a better system-welfare outcome. In plain English: if the damage comes from rules, incentives, records, or legal permissions, then changing those rules can change the result. The formal theorem covers institutional games where the parties, information, incentives, and available rule changes are clear enough to define the repair.
GDSS: Group Decision Support System — negotiation software that takes each side's payoffs and issue weights and returns the trade-offs and a recommended agreement.
Green-minus-brown factor: A finance control variable capturing the return difference between environmentally clean ('green') and polluting ('brown') firms, used to check that a measured effect is not just a stand-in for climate exposure.
Group Decision Support System: GDSS — negotiation software that takes each side's payoffs and issue weights and returns the trade-offs and a recommended agreement. The infrastructure of modern deal-making; W-blind unless extended to carry the system-welfare coordinate.

H

Hansmann ownership: Henry Hansmann's theory (1996) that who owns an enterprise — and therefore bears its residual risk — determines who is accountable for its outcomes.
Hollow Win: A (c,a,b) = (0,1,1) outcome in the 8-outcome Missing System Theorem taxonomy: both private decision-makers gain while the system-welfare coordinate degrades — c=0 means the system is not preserved, with no floor on how far its welfare can fall. It names the result classification: both private ledgers can show gain while system welfare falls.

I

IASB: The International Accounting Standards Board — the body that writes the international accounting standards companies follow in their financial statements. Its US counterpart is the FASB.
Incentive compatibility: A mechanism is incentive-compatible when acting honestly (or in the intended way) is each participant's own best strategy, so no one gains by misreporting.
Individual rationality: A condition that no party ends up worse off than its no-deal (disagreement) alternative, so each is willing to take part in the mechanism.
Information asymmetry: A situation in which one party to a transaction knows more than the other — for example, the seller knows the product's true quality and the buyer does not.
ISO 42001: ISO/IEC 42001 — the international management-system standard for artificial intelligence, giving organizations a certifiable framework for governing AI risk.
Issuer-pays: The credit-rating business model in which the company being rated pays the agency for its rating, creating a built-in incentive to give favorable ratings.

K

Kalai-Smorodinsky: A bargaining solution (Kalai and Smorodinsky, 1975) that scales each party's agreed share to their best-possible ('ideal') outcome, so that if the total pie grows, each party's share grows with it.

L

Laffont-Tirole model: A canonical regulation model (Laffont and Tirole) in which a regulator designs a contract for a firm that privately knows its own costs; widely used to study optimal regulation under hidden information, and used here to derive the fiscal-capture threshold rather than assume it.
LIBOR: The London Interbank Offered Rate — a benchmark interest rate set from banks' daily submissions and used to price trillions of dollars of contracts worldwide; it was the subject of a major manipulation scandal and has since been phased out.
Lump-sum transfers: One-time reallocations of wealth that do not depend on anyone's later choices, so they shift who has what without distorting incentives. The transfers the Second Welfare Theorem assumes.

M

MCAS: The Maneuvering Characteristics Augmentation System — an automated flight-control feature on the Boeing 737 MAX that pushed the aircraft's nose down based on sensor readings; its single-sensor design was implicated in two fatal crashes.
Mechanism design: The branch of economics (Hurwicz, Maskin, Myerson) that designs the rules of a fixed game — auctions, contracts, taxes — to steer self-interested players toward a desired outcome. It optimizes within a structure rather than changing the structure, which is what Game-Change does.
Misery: The (0,0,0) outcome: both private parties lose and the system degrades too — everyone worse off, including the shared system.
Missing System Theorem: A research program about private decisions and their effects on shared systems. Its information theorem uses a testable comparison: if two cases look identical in every fact the decision-maker uses, but system welfare differs, the decision-maker cannot tell which case is better for the system from those facts alone. Axiom 2′ states that witness; Proposition 4.1 proves that W cannot be recovered from the declared party-payoff input across a domain containing it. Independent system measurement can add the missing information.
MST: Missing System Theorem — two parties can make a deal that is privately efficient for both and destructive to the system around them, and no analysis of the deal itself can fully detect that damage from the parties' payoffs alone. Agent payoffs can reflect some system pressure, but they do not fully determine system welfare without an independent system-welfare measurement channel.
Myerson-Satterthwaite theorem: A result (Myerson and Satterthwaite, 1983) proving that when a buyer and a seller each privately know how much the thing is worth to them, no bargaining rule can guarantee they always trade whenever trade would benefit both — some worthwhile deals inevitably fall through. It is a limit on efficient bargaining between two informed parties, which is a different limit from the Missing System Theorem (a system whose welfare is not in the payoffs at all).

N

Nash equilibrium: A Nash equilibrium is a combination of strategies — one for each player — where no player can do better by changing their own strategy while everyone else keeps theirs fixed. Each player's choice is a best response to what the others are doing, so nobody has a unilateral incentive to deviate. It's a point of mutual consistency, not necessarily a point of mutual benefit. That last distinction is the crux: an equilibrium is stable in the sense that it holds together once reached, but stability says nothing about whether the outcome is good for the players collectively. The Prisoner's Dilemma is the canonical illustration: each suspect is better off confessing no matter what the other does, so both confess — that pair of choices is the Nash equilibrium, because neither can improve by unilaterally staying silent. Yet had both stayed silent, each would have done better. The equilibrium holds together, but it is jointly worse than an available alternative — mutual consistency without mutual benefit.
Natural monopoly: A market in which a single producer can serve the whole demand more cheaply than several could, so competition does not naturally arise.
Net present value: NPV — the worth today of a stream of future costs or benefits, after discounting each future amount back to present dollars because a dollar later is worth less than a dollar now. A stock (a lump sum), not a per-year flow.
NIST AI RMF: The US National Institute of Standards and Technology AI Risk Management Framework — a published, voluntary framework for identifying and managing risks in AI systems.
Non-PST Games: Games outside Private-Systemic Tension. In these games, the private Pareto frontier can include outcomes where private efficiency and system preservation move together. Examples include complete-market settings where the system-welfare coordinate is priced and traded; cooperatives, mutuals, nonprofits, or foundations when residual control is assigned to the affected patron or mission class; and Nordic positive-control cases such as Estonia's e-governance transparency, Sweden's open-records system, and Norway's sovereign wealth fund governance.
Normal accidents: Sociologist Charles Perrow's argument (1984) that in complex, tightly coupled systems some accidents are effectively inevitable, arising from interactions no one could fully foresee.
Normalization of deviance: Sociologist Diane Vaughan's term (from her Challenger analysis) for how a repeatedly accepted lower standard gradually comes to seem normal until it produces disaster.
NPV: Net present value — the worth today of a stream of future costs or benefits, discounted back to present dollars. A one-time total, not an annual flow.
Numeraire: The common unit of account other values are converted into for comparison — here the private-payoff (dollar) unit, so a welfare loss can be subtracted from a private gain.

O

Off-Ledger Theorem: A conditional disclosure claim. If two cases have the same reported accounting and party-payoff information but different W, those reports do not identify W across that domain. An independently supported system-welfare disclosure can add the missing information. Whether present financial statements contain enough information to determine a particular W effect is an empirical accounting question.
Orthogonal: Two things are orthogonal when they are independent — varying one tells you nothing about the other; they sit on different axes. When two constraints 'bind on orthogonal axes,' they limit different things and do not overlap.
Ostrom: Elinor Ostrom, the political economist (and Nobel laureate) who showed that communities can successfully govern shared resources — fisheries, forests, irrigation systems — through their own rules, without either privatizing them or handing them to the state. Her work is why 'communities and the affected public' is one of the System Portage lanes: the harmed community can sometimes organize and manage the commons itself.
Overlapping Interests: The first Missing System Theorem axiom (Axiom 1): the two parties share a private gain to pursue — there is a deal both prefer to no deal. Without it there is no bargain and no Hollow Win.

P

Pareto efficiency: A Pareto improvement is a change that makes at least one person better off and no one worse off. An outcome is Pareto-efficient when no such improvement is left — you cannot help anyone without hurting someone. Named after Vilfredo Pareto. The catch the Missing System Theorem exposes: a deal can be Pareto-efficient for the two parties while the wider system it damages was never counted as one of the parties.
Payoff-Only Pricing Limit: Working label for the conditional pricing claim: when the information used in bilateral price formation does not identify an independently measured system-welfare effect, that effect cannot be fully priced from that information alone. The claim fails for an information set that already determines W. Liability, insurance, regulation, disclosure, bargaining, or governance can add information and consequences that partially or fully internalize the effect.
PFAS: Per- and polyfluoroalkyl substances — long-lasting synthetic 'forever chemicals' used in industry that persist in the environment and human body and are expensive to clean up. Their carbon-fluorine (C-F) bond is among the strongest in chemistry, which is why they do not break down.
Pigouvian tax: A tax set equal to the harm an activity does to others, so whoever causes the harm has to pay for it — named after the economist Arthur Pigou. A carbon tax is the textbook case: if burning a ton of coal does a certain dollar amount of climate damage, a Pigouvian tax charges that amount per ton, so the polluter faces the true social cost. It works only if a regulator can measure the harm and is free to impose the charge. ('Pigouvian' and 'Pigovian' are the same word.)
Planner-relative: A number is planner-relative when its value depends on value judgments that no market supplies — above all the shadow prices the accounting assumes, like the dollar value put on a human life or on a ton of carbon. Markets do not reveal those prices; a 'planner' (a policymaker or social evaluator) has to choose them, and different reasonable choices give different totals. So the System-Welfare-Adjusted GDP figure is not one objective number — it is a level relative to the price set assumed, which is why it is reported with a sensitivity band rather than as a settled measurement. (After Arrow: turning many separate harms into one social total always takes value judgments.)
Policy Lab: A public research framework for organizing a problem, identifying responsible institutions, assembling evidence, and defining the questions that still need answers.
Prat conformism: Economist Andrea Prat's 2005 result: making a decision visible to a known evaluator can push the decision-maker to report what that evaluator rewards (conformism) instead of the truth. The multi-audience System Portage design is the response.
Pre-registration: Committing in advance, in writing, to exactly what will be measured and what result would count as success or failure, before the outcome is known — so a test cannot be reinterpreted after the fact.
Principal-agent problem: The problem that arises when one party (the principal — say, shareholders, or the public) relies on another (the agent — say, a manager, or a regulator) to act on its behalf, while the agent has its own interests and better information. The agent may not do what the principal actually wants, and the principal cannot fully see or control it.
Proof-of-Stake: A method for running a blockchain in which participants lock up ('stake') their own coins to earn the right to validate transactions, instead of solving energy-intensive puzzles as in Bitcoin's proof-of-work.
Public-choice theory: The branch of economics that analyzes political actors — voters, regulators, legislators — as self-interested agents responding to incentives, rather than as neutral servants of the public good.
Pure exchange economy: An idealized setting where people only trade goods they already own, with no production and no effect on anyone outside the trade — two kids swapping an apple for a cookie, collectors trading cards. Everyone ends up at least as well off and no wider system is touched, so the Missing System Theorem does not apply.

R

Reform Dividend: The public value created when a successful reform reduces recurring harm, waste, or institutional failure.
Reform Pathfinder: A public research tool that connects a policy problem to jurisdiction-specific institutions, existing frameworks, and possible research paths.
Regulatory arbitrage: Structuring an activity to exploit gaps or differences between rules or jurisdictions in order to avoid a regulation's intended bite.
Residual claimant: The party that receives whatever surplus is left, or covers whatever deficit remains, after all other claims are paid — the bearer of residual risk, which is why ownership ties to accountability.
Residual risk: The leftover gain or loss a party bears after all fixed claims are paid; owners are the residual risk-bearers.
Restoration event: An event — a lawsuit, disclosure, settlement, or regulation — that suddenly forces a firm's previously hidden system-welfare harm into visible, priced view.
Rubinstein bargaining: The Rubinstein (1982) alternating-offers model: two parties take turns making offers and delay is costly, which yields a determinate predicted split.

S

Search goods: Goods whose quality a buyer can verify before purchase (a screen's size). Contrast experience goods, whose quality is known only after use.
Second Welfare Theorem: The second of the two Welfare theorems: any Pareto-efficient allocation can be achieved as a competitive equilibrium given suitable lump-sum transfers.
Shadow price: The dollar value assigned to something that has no market price — a stand-in price for a good that is never actually bought or sold. There is no market where you can buy a human life, a ton of carbon in the atmosphere, or an hour of a commuter's time, so to weigh those things in a calculation an economist assigns each a value: roughly $10 million for a statistical life, a set dollar figure per ton of CO2, and so on. Because the number is chosen rather than read off a market, reasonable people can pick different shadow prices — which is exactly why totals built from them are planner-relative (they depend on whose values you plug in) and capture-sensitive (a captured agency can set the price too low).
Shapley value: A cooperative-game rule (Shapley, 1953) that divides joint gains by each party's average marginal contribution across all possible orderings of the group.
Short-selling: Profiting when a security's price falls, by selling borrowed shares and buying them back later at a lower price. A short-seller bets a price will drop.
Sin stocks: Shares of companies in industries widely seen as objectionable — tobacco, alcohol, gambling — often used as a control category in return studies because they have historically earned abnormal returns.
Skewness: A measure of how lopsided a set of outcomes is. Returns with positive skew have occasional big gains and many small losses (like a lottery ticket); negative skew has occasional big losses and many small gains (like selling insurance). 'More positive skew' means the rare surprises tend to be to the upside.
Social cost of carbon: The dollar estimate of the damage caused by emitting one additional ton of carbon dioxide — covering future harms like heat, floods, crop loss, and health effects. It is a shadow price for carbon, used to weigh climate policy, and like all shadow prices it is chosen rather than read off a market, so different studies produce different figures.
SSRN: The Social Science Research Network — a widely used online repository where scholars post working papers before or instead of formal journal publication.
Stable Misery: The (1,0,0) outcome: the system is preserved while both private parties lose. The system survives but no one privately gains.
Stiglerian capture: Regulatory capture through lobbying, funding, and the revolving door, named after economist George Stigler — a regulator gradually co-opted by the industry it oversees. Distinct from fiscal capture, which runs through the regulator's own revenue dependence.
Structural holes: Sociologist Ronald Burt's idea (1992) that whoever sits between otherwise-disconnected parties (in a 'structural hole') gains brokerage power — here, the concern that whoever controls what gets recorded gains that power.
Substitution trap: When a rule bans a specific product, the industry does not exit but switches to a substitute that performs the same economic function while dodging the banned feature — often a more potent or harder-to-monitor version. A rule that names a product feature can be escaped; a rule that names the function cannot.
Sustainable Lose-Win: The (1,0,1) outcome: the mirror — the second party gains and the system is preserved while the first party bears the cost.
Sustainable Win-Lose: The (1,1,0) outcome: one party gains and the system is preserved while the other party bears the cost — a private loss that keeps the system whole.
System Dependence: The third Missing System Theorem axiom (Axiom 3): the parties' activity actually moves system welfare W, so the deal changes the system rather than leaving it untouched.
System Independence: Missing System Theorem's interest-level Axiom 2: the selected system has at least one interest outside the union of the parties' stated interests (formally, I_C ⊄ ∪ I_i). This axiom helps describe the domain, but Axioms 1–3 alone do not prove W-Independence. The payoff-level information result requires the separate witness in Axiom 2′.
System Portage: Responsibility moving to an institution able to carry a necessary repair forward when the original actor cannot complete it.
System-Welfare-Adjusted GDP: A proposed national-accounting measure that reports economic output alongside a separate account of measured effects on the systems people depend on.

T

Temptation preferences: Preferences (Gul and Pesendorfer, 2001) under which merely having a tempting option on the menu is costly — it takes self-control to resist — so a person can genuinely prefer a smaller menu that removes the temptation.
The core: In cooperative game theory, the set of outcomes that no subgroup could improve on by breaking away — allocations stable against every coalition.
The nucleolus: A cooperative-game solution (Schmeidler, 1969) that picks the allocation minimizing the largest coalition's dissatisfaction, then the next largest, and so on.
Tier 2 Trap: The Tier 2 (stronger) Missing System Theorem result: adding Axiom 4 (a privately efficient deal beats no-deal for everyone) and Private-Systemic Tension, every privately efficient outcome degrades the system. Tier 1 says W can't be read off the payoffs; Tier 2 says the efficient deals actively harm the system.

V

Value of a statistical life: The dollar figure used to value preventing one expected death, so safety and health policies can be weighed in money. It is not the price of any specific person's life; it is inferred from how much people actually pay, or demand, for small changes in risk (for instance, extra wages for riskier jobs) and scaled up. US agencies use roughly $10 million. Because it is a chosen figure, any welfare total that depends on it is planner-relative.
Vickrey-Clarke-Groves mechanism: A landmark auction and allocation design (abbreviated VCG, after Vickrey, Clarke, and Groves) that makes telling the truth about what you value the smart strategy, by charging each participant the cost their participation imposes on everyone else. It is a pillar of mechanism design — but it optimizes over the participants' stated values, so it inherits the blind spot the Missing System Theorem describes: a system with no participant to speak for it is not in the objective.

W

W: The system-welfare coordinate. W records the welfare of the shared system affected by a decision: fiscal capacity, competitive integrity, regulatory capacity, social welfare, ecological capacity, financial-system integrity, benchmark integrity, public health, safety, mortality, morbidity, climate damage, ecosystem loss, cleanup cost, productivity loss, future damage, market trust, institutional capacity, intergenerational burden, or enforcement capacity.
W-Independence: A conditional information result. If two situations have the same observed party-payoff vector and different system welfare, no function of that payoff vector alone can recover W across the domain. The result is specific to the declared input signal and does not prevent independent measurement of W.
Weak commensurability: The weaker assumption that welfare effects can be signed (given a direction) and ranked (ordered), without placing them on one common cardinal scale. What the Sign-Rank Theorem shows is sufficient.
Welfare theorems: The two Fundamental Theorems of Welfare Economics — the formal statement of Adam Smith's invisible hand. The First says every competitive-market equilibrium is Pareto efficient: no one can be made better off without making someone worse off. The Second says any Pareto-efficient outcome can be reached as a competitive equilibrium given suitable initial transfers. Both hold only under strong conditions — chief among them complete markets with no unpriced externalities. In the Missing System Theorem frame this is the boundary: the welfare theorems describe the idealized limit where even system welfare would be priced and traded, which real economies generally do not reach.
Win-Win-Win: The (c,a,b) = (1,1,1) outcome: both private parties gain and the system coordinate is preserved. The only outcome where private success and system welfare hold together — the target a W-aware platform steers toward.

Z

Zero-sum game: A situation where one side's gain is exactly the other side's loss, so there is no shared surplus to protect — poker (the pot is fixed), a coin-flip bet, a chess match. The total stays constant; the players only fight over how it is divided. Because there is no mutual gain, it falls outside the Missing System Theorem.
Zipf's Law: An empirical statistical regularity (word-frequency rank patterns) that holds broadly across data before any deductive proof — cited as an analogy for an observed-but-not-yet-derived 'law.'