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Arrovian aggregation in economic environments: how much should we know about indifference surfaces?
Authors:Marc Fleurbaey
Institution:a CATT, THEMA, IDEP, University of Pau, Av. du Doyen Poplawski, 64000 Pau, France
b Institute of Economic Research, Hitotsubashi University, Kunitachi, Tokyo 186-8603, Japan
c Faculty of Economics, Hitotsubashi University, Kunitachi, Tokyo 186-8601, Japan
Abstract:Arrow's celebrated theorem of social choice shows that the aggregation of individual preferences into a social ordering cannot make the ranking of any pair of alternatives depend only on individual preferences over that pair, unless the fundamental weak Pareto and non-dictatorship principles are violated. In the standard model of division of commodities, we investigate how much information about indifference surfaces is needed to construct social ordering functions satisfying the weak Pareto principle and anonymity. We show that local information such as marginal rates of substitution or the shapes “within the Edgeworth box” is not enough, and knowledge of substantially non-local information is necessary.
Keywords:D63  D71
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