Philosophy, Law & Politics
Section 1
The Core Idea
The veil of ignorance is a thought experiment from John Rawls: when designing the rules of society (or any collective), imagine you don't know which position you'll occupy. You could be rich or poor, able or disabled, in the majority or minority. Behind the veil, you choose principles that you'd accept regardless of your place. The result, Rawls argued, is a bias toward fairness: you'd favour rules that don't leave the worst off too badly off, because you might be them. The veil forces impartiality by removing self-interest from the choice.
Rawls used it to argue for his two principles of justice: equal basic liberties, and social and economic inequality only when it benefits the least advantaged. The logic: behind the veil, you'd maximise the minimum (maximin) because you're choosing under uncertainty about your fate. The veil doesn't guarantee agreement — people might still disagree about risk tolerance or what counts as "benefit" — but it structures the question. What would you choose if you didn't know who you'd be?
In strategy and negotiation, the veil is a tool for designing rules and splits. When dividing a pie or setting policy, ask: would I accept this if I didn't know which side I'd be on? If not, the arrangement may be unfair. The veil doesn't tell you what's fair; it tests whether you're biasing the rules toward your current position.
Free playbook
Get The Business Model Playbook
58 business models, one visual page each: how the money flows, the metrics that matter, and who runs it. Free when you join the Faster Than Normal email.
Free. No spam. Unsubscribe anytime.
Section 2
How to See It
The veil of ignorance appears when someone asks "would you accept this if you were on the other side?" or when rules are justified by "anyone in any position could accept this."
Business
You're seeing Veil of Ignorance when a cap table or partnership agreement is designed so that no party would feel exploited regardless of which role they ended up in. "Would you sign this if you didn't know whether you'd be the lead or the supporting partner?" is the veil test. Fair splits often pass it.
Technology
You're seeing Veil of Ignorance when a platform's content or privacy policy is evaluated by asking "would this be acceptable if I were a user, a creator, or the platform?" Policies that only make sense from one position fail the test. The veil pushes toward rules that are acceptable from all positions.
Investing
You're seeing Veil of Ignorance when fund terms (e.g. fee structure, liquidity) are set so that they'd be reasonable whether the fund does well or poorly. "Would I accept these terms as an LP if I didn't know whether this fund would be a top or bottom quartile performer?" is the veil question.
Markets
You're seeing Veil of Ignorance when a regulation or market rule is defended on the grounds that it treats all participants fairly — i.e. you'd accept it regardless of which participant you turned out to be. The veil is a test for impartiality in rule design.
Section 3
How to Use It
Decision filter
"When designing rules, splits, or policies, ask: would I accept this if I didn't know which role or outcome I'd get? If the answer is no, the arrangement may be biased toward your current position. Revise until it passes the veil test — or own that you're choosing partiality."
As a founder
Use the veil when setting equity, governance, or partner terms. Would you accept this cap table if you didn't know whether you'd be the founder, the first employee, or the investor? Would you accept this governance if you were in the minority? Designs that pass the veil test are more stable and perceived as fair.
As an investor
When negotiating terms, apply the veil: would these terms be acceptable if I were the founder? If not, you may be pushing for something that's exploitative or unstable. The best terms are those both sides would accept behind the veil — which often means balanced rather than maximally favourable to one side.
As a decision-maker
When setting policy for a group, run the veil test. Would this policy be acceptable to someone in the worst-affected position? If not, you're either accepting that the policy is partial or you need to revise. The veil doesn't require that everyone be equally well off; it requires that the arrangement not be one you'd reject if you were the one losing.
Common misapplication: Assuming the veil yields a unique answer. People behind the veil may still disagree (e.g. risk aversion, definition of benefit). The veil structures the question; it doesn't guarantee consensus. Second misapplication: Using the veil to justify the status quo. "You'd accept this if you didn't know your position" can be a dodge if the status quo is already unfair. The veil is a test for new rules, not a rubber stamp for existing ones.
Section 4
The Mechanism
Section 5
Founders & Leaders in Action
Warren BuffettCEO, Berkshire Hathaway
Buffett has long advocated for tax and policy positions that he says he'd support even if he weren't wealthy — e.g. higher taxes on the rich. The veil test: would you accept this if you didn't know your position? Buffett's public stance is that he would. Whether that's consistent with his full behaviour is debated; the frame is explicitly Rawlsian.
Reed HastingsCo-founder & CEO, Netflix
Netflix's culture memo and compensation philosophy (e.g. "adequate performance gets a generous severance") can be read through the veil: would you accept this policy if you didn't know whether you'd be the one let go or the one staying? The claim is that the same rules apply to everyone and that the outcome is fair from any position. Critics disagree; the veil is the test being invoked.
Section 6
Visual Explanation
Veil of ignorance: choose rules without knowing your position. Would you accept this if you were the worst off? If not, the rule may be partial. The veil forces impartiality.
Section 7
Connected Models
Leads-to
Golden Rule
The veil is a test for fairness: would you accept the arrangement from any position? The Golden Rule (treat others as you'd want to be treated) is a cousin: the veil generalises it to rule design. Both push toward impartiality.
Tension
Utilitarianism
Utilitarianism maximises total utility; the veil can yield maximin (favour the worst off). They can conflict: a utilitarian might accept a society where the worst off are very badly off if the total is higher. Rawls rejected that behind the veil; you'd care about the minimum. The tension is between total and minimum.
Reinforces
Trade-offs
Trade-offs are unavoidable in rule design. The veil doesn't eliminate them; it structures how we make them. We choose under uncertainty about who we'll be, which shifts the trade-off toward protecting the worst-off position.
Leads-to
Inclusive Economic & Political Institutions
Inclusive institutions spread opportunity; the veil would favour them because behind the veil you'd want a society where you could thrive regardless of your starting position. The veil is a normative argument for inclusion.
Reinforces
Precedents
Precedents should be set so they're acceptable when applied to anyone. The veil test: would this precedent be acceptable if you were on the losing side? Setting precedents that pass the veil supports long-term fairness.
Tension
Revealed Preference
Revealed preference shows what people actually choose. Behind the veil, we're asking what they would choose under hypothetical conditions. What people do (revealed) may not match what they'd choose behind the veil (hypothetical). The tension is between actual and ideal choice.
Section 8
One Key Quote
— John Rawls, A Theory of Justice (1971)"No one knows his place in society, his class position or social status, nor does anyone know his fortune in the distribution of natural assets and abilities... The principles of justice are chosen behind a veil of ignorance."
The veil strips away everything that could bias the choice toward your actual position. What's left is a choice that could be made by anyone. The result, Rawls argued, is principles that are fair to all.
Section 9
Analyst's Take
Faster Than Normal — Editorial View
Use the veil to test splits and rules. When dividing equity, setting governance, or designing policy, ask: would I accept this if I didn't know which side I'd be on? If the answer is no, you're biasing the arrangement. Revise until it passes, or own that you're choosing partiality. The best deals are those that pass the veil test — they're stable because no party feels exploited.
The veil doesn't require equality. Rawls allowed inequality that benefits the worst off. So "would you accept this from any position?" doesn't mean "everyone gets the same." It means "no position is so bad that you'd reject the whole arrangement if you might be in it." That's a lower bar than equality but still a real constraint.
Apply it to your own rules. When you're the one with power (founder, investor, regulator), the veil is a check: would the rules you're imposing be acceptable if you were on the other side? If not, you're exercising power in a way that might not survive reflection. That doesn't mean you must change — but you should know what you're doing.
Section 10
Test Yourself
Is this mental model at work here?
Scenario 1
Two co-founders split equity 50/50. They agree they'd have accepted the same split if they'd been the other person. They're using the veil to justify the split.
Scenario 2
An investor demands terms that are standard in the industry but that founders often say they'd never accept if they were the investor. The investor says 'market terms.'
Section 11
Top Resources
Summary. The veil of ignorance: choose rules without knowing your position. It forces impartiality and often favours arrangements that protect the worst off. Use it to test whether splits, governance, and policies are fair — and to check your own bias when you have power.
01
Book
The source. Rawls introduces the veil and argues it yields his two principles of justice. Dense but foundational. The first chapter and the veil section are the key bits.
02
Book
Rawls's later, shorter restatement. More accessible than the original; covers the veil and the principles without the full apparatus.
03
Book
Sen's critique and extension of Rawls. He uses the veil in a more comparative, less ideal way. Useful for seeing how the idea travels beyond Rawls's precise formulation.