Strategy-Proof Voting on Compact Ranges

Strategy-proof social choice functions are characterized for societies where the space of alternatives is any full dimensional compact subset of a Euclidean space and all voters have generalized single-peaked preferences. Our results build upon and extend those obtained for cartesian product ranges by Border and Jordan (1983). By admitting a large set of non-Cartesian ranges, we give a partial answer to the major open question left unresolved in this pioneering article. We prove that our class is composed by generalized median voter schemes which satisfy an additional condition, called the intersection property [Barberà, Massó, and Neme (1997)].Journal of Economic LiteratureClassification Number: D71.     

Strategy-proof and individually rational social choice functions for public good economies

Summary We consider the problem of choosing an allocation in an economy in which there are one private good and one public good. Our purpose is to identify the class of procedures of choosing an allocation which satisfy strategy-proofness, individual rationality, no exploitation and non-bossiness. Any such procedure is a scheme of semi-convex cost sharing determined by the minimum demand principle.I wish to thank Professors Salvador Barbera, Matthew Jackson, Herve Moulin and William Thomson for their helpful suggestions and two anonymous referees for their detailed comments. Conversations with Professors Hideo Konishi, Shinji Oseto Ken-ichi Shimomura and Stephen Ching were helpful. This work is supported by the Japan Economic Research Foundation and Research Grants PB89-0294 and PB89-0075 from the Direcion General de Investigacion Cientifica y Tecnica, Spanish Ministry of Education.     

Strategy-proof and individually rational social choice functions for public good economies

Summary This note is to inform about a mistake in my paper (Serizawa, 1996). In that paper, I characterized strategy-proof, individually rational, budget-balancing, non-exploitative and non-bossy social choice functions for economies with one public good and one private good. I established as Theorem 3 (page 507) that a social choice function is strategy-proof, individually rational with respect to endowment, budget-balancing, non-exploitative and non-bossy if and only if it is a scheme of semi-convex cost sharing determined by the minimum demand principle. I also exposed one example (Example 2, page 507) in order to emphasize that non-bossiness is indispensable for this characterization. I claimed that the social choice function in that example satisfies the above axioms except for non-bossiness, and is not a scheme of semi-convex cost sharing. However, the social choice function in the example is actually not strategy-proof, as shown in the simple discussion below. Therefore it is an open question whether or not a similar characterization theorem holds without non-bossiness.I thank Professor Rajat Deb, who kindly pointed out my mistake.     

An IMPOSSIBILITY THEOREM IN PURE PUBLIC GOODS ECONOMIES WITH FEASIBILITY CONSTRAINTS: VOTING BY COMMITTEES IN NON-RECTANGULAR FEASIBLE SETS*

We consider the problem of choosing an alternative in a pure public goods economy with feasibility constraints when voters have "additively-separable and single-peaked"preferences.Our purpose is to identify tops-only voting procedures satisfying "nonmanipulability" and "voter sovereignty". First, we show that such procedures are generalizations of the schemes of "voting by committees"¹)introduced by Barbera, Sonnenschein and Zhou (1991) in the sense that these procedures are defined similarly for the generalized feasible set. Second, we establish that when no two goods can be simultaneously produced at their maximal feasible levels, the procedures are characterized by the existence of a very powerful voter.     

The Role of Cross-Border Networks of Skilled Labor in Offshore Outsourcing: Empirical Evidence Based on the Network Theory

This study investigates the determinant role of the cross-border movement of skilled labor in the expansion of service trade between the US, and both developed and developing countries. For this purpose, we employ the key concepts of network theory as an analytical framework and conduct panel data analysis and graphical modeling analysis for 31 countries from 1999 to 2008. In this decade, offshore outsourcing in the service trade took off worldwide. We use data for each country’s service exports to the US, number of H-1B visas issued, GNI per-capita, network readiness index, and an English dummy for the official language. We illustrate the trajectory and interactions between these factors. These analyses yield three observations. First, service trade with the US is more intensive among higher income countries. Second, the number of H-1B visas issued has a positive effect on service exports to the US. Third, individuals in lower income countries tend to desire H-1B visas and create intensive skilled labor networks with the US, the path through which developing countries such as India expanded their service exports to the US.     

Vickrey allocation rule with income effect

We consider situations in which a society tries to efficiently allocate several homogeneous and indivisible goods among agents. Each agent receives at most one unit of the good. In this paper, we establish that on domains that include nonquasi-linear preferences—preferences exhibiting income effects—an allocation rule that satisfies Pareto-efficiency, strategy-proofness, individual rationality, and nonnegative payment uniquely exists, which is the Vickrey allocation rule. H. Saitoh is a JSPS Research Fellow.     

Inefficiency of Strategy-Proof Rules for Pure Exchange Economies

In his pioneering article, (in “Decision and Organization” (C. B. McGuire and R. Radner, Eds.), pp. 297-336, North-Holland, Amsterdam, 1972) Hurwicz establishes that there is no strategy-proof, Pareto-efficient, and individually rational rule for pure exchange economies with two agents and two goods, provided that the domain includes a sufficiently wide class of classical preferences. In this article, we extend his result to pure exchange economies with any finite number of agents and goods. We establish that (i) there is no strategy-proof, Pareto-efficient, and individually rational rule on the class of classical, homothetic, and smooth preferences; and (ii) there is no strategy-proof, Pareto-efficient, and symmetric rule on the same class of preferences. Journal of Economic Literature Classification Numbers: D78, D71, C72.     

Variety‐Controlling Public Policy Under Addiction and Saturation

This paper constructs a tractable general equilibrium model for investigating the dissimilar effects of addiction and saturation on consumption and public policy. By introducing an industry‐specific intertemporal consumption externality, we provide clear analytical results that a lump‐sum subsidy for firms can increase welfare in the presence of a negative externality (saturation). A tax can accomplish the same given a positive externality (addiction). Unlike existing studies of cultural goods, these results are not based on assumptions concerning exogenous different preferences across groups, but rather on conventional monopolistic competition and consumption habit formation models in macroeconomics.     

Efficient strategy-proof exchange and minimum consumption guarantees

For exchange economies with classical economic preferences, it is shown that any strategy-proof social choice function that selects Pareto optimal outcomes cannot guarantee everyone a consumption bundle bounded away from the origin. This result demonstrates that there is a fundamental conflict between efficiency and distributional goals in exchange economies if the social choice rule is required to be strategy-proof.     

Characterizing the Vickrey combinatorial auction by induction

This note studies the allocation of heterogeneous commodities to agents whose private values for combinations of these commodities are monotonic by inclusion. This setting can accommodate the presence of complementarity and substitutability among the heterogeneous commodities. By using induction logic, we provide an alternative proof of Holmstrom’s (Econometrica 47:1137–1144, 1979) characterization of the Vickrey combinatorial auction as the unique efficient, strategy-proof, and individually rational allocation rule on a smoothly connected domain of value profiles. Our approach is elementary, not involving smoothness, and intuitive in the sense that familiar properties of the single-item second-price auction provide the first step in our induction on the number of auctioned items. Moreover, our method of proof can be applied to domains which may not be smoothly connected, including nonconvex ones. The authors acknowledge the helpful comments of anonymous referee. Serizawa greatly benefited from discussion with Rajat Deb.