A characterization of consistent collective choice rules

We characterize a class of collective choice rules such that collective preference relations are consistent. Consistency is a weakening of transitivity and a strengthening of acyclicity requiring that there be no cycles with at least one strict preference, which excludes the possibility of a “money pump.” The properties of collective choice rules used in our characterization are unrestricted domain, strong Pareto, anonymity and neutrality. If there are at most as many individuals as there are alternatives, the axioms provide an alternative characterization of the Pareto rule. If there are more individuals than alternatives, however, further rules become available.     

Ordering infinite utility streams

We reconsider the problem of ordering infinite utility streams. As has been established in earlier contributions, if no representability condition is imposed, there exist strongly Paretian and finitely anonymous orderings of intertemporal utility streams. We examine the possibility of adding suitably formulated versions of classical equity conditions. First, we provide a characterization of all ordering extensions of the generalized Lorenz criterion as the only strongly Paretian and finitely anonymous rankings satisfying the strict transfer principle. Second, we offer a characterization of an infinite-horizon extension of leximin obtained by adding an equity-preference axiom to strong Pareto and finite anonymity.     

Fair allocations of a renewable resource

In an economy with finitely many agents, one renewable resource, and an infinite horizon, it is shown that there is exactly one maximal allocation corresponding to given limiting shares of consumption and this allocation converges monotonically. Therefore, if there is no discounting, at most one fair maximal program exists—that which gives an equal amount to each individual in the limit. In this allocation, envy is always finite. However, only in special cases is it envyfree. This is in contrast to the case of finite economies where envy-free and Pareto efficient allocations may not exist or, if they exist, may not be unique.     

The dynamics of distributive politics

We study dynamic committee bargaining over an infinite horizon with discounting. In each period, a committee proposal is generated by a random recognition rule, the committee chooses between the proposal and a status quo by majority rule, and the voting outcome in period t becomes the status quo in period t + 1. We study symmetric Markov equilibria of the resulting game and conduct an experiment to test hypotheses generated by the theory for pure distributional (divide-the-dollar) environments. In particular, we investigate the effects of concavity in the utility functions, the existence of a Condorcet winning alternative, and the discount factor (committee “impatience”). We report several new findings. Voting behavior is selfish and myopic. Status quo outcomes have great inertia. There are strong treatment effects that are in the direction predicted by the Markov equilibrium. We find significant evidence of concave utility functions.     

Manipulation and the Pareto rule

This paper examines rules that map preference profiles into choice sets. There are no agendas other than the entire set of alternatives. A rule is said to be “manipulable” if there is a person i, and a preference profile, such that i prefers the choice set obtained when he is dishonest to the one obtained when he is honest. It is “nonmanipulable” if this can never happen. The paper indicates how preferences over choice sets might be sensibly derived from preferences over alternatives, and discusses seven different notions of manipulability associated with seven different assumptions about preferences over sets of alternatives. The paper has two sections of results. In the first I show that the Pareto rule, that is, the rule that maps preference profiles into corresponding sets of Pareto optima, is nonmanipulable in four of the seven senses of manipulability, and manipulable in three of them. In the second section, I examine this conjecture: If an arbitrary rule is nonmanipulable and nonimposed, and if indifference is disallowed, then every choice set must be contained in the set of Pareto optima. The conjecture is true under the strongest definition of nonmanipulability.     

A note on the existence of a monetary equilibrium over an infinite horizon

Summary. This note considers an economy with ‘inside money’ that extends over an infinite horizon in the case of certainty. It shows the existence of an equilibrium and the indeterminacy of the overall price level when the supply of balances is set exogenously.Received: 6 November 2003, Revised: 2 September 2004 JEL Classification Numbers: D50, E40, E50.G. Bloise: I am indebted to Jacques Dréze, Leo Ferraris, Cuong Le Van, Luca Panaccione, Herakles Polemarchakis and Pietro Reichlin for the long discussions and their valuable suggestions. I also thank an anonymous referee for her/his advices.     

Birth-date dependent population ethics: critical-level principles

"This paper investigates birth-date dependent principles for social evaluation in an intertemporal framework in which population size may vary. We weaken the strong Pareto principle in order to allow individuals' birth dates to matter in establishing a social ordering. Using the axiom independence of the utilities of the dead, we characterize population principles with a recursive structure. If the individual substitution principle and an individual intertemporal equivalence axiom are added, birth-date dependent generalizations of the critical-level generalized utilitarian principles result. Stationarity leads to the special case of geometric discounting."     

Folk Theorem For Bilateral Bargaining with Vector Endowments

We analyse a bargaining game of two players on the division of the sum of their vector endowments, with alternating proposals and discounting of single period utilities. The pair of endowments is not weakly Pareto‐efficient. Until they reach an agreement, each of the parties can withdraw from bargaining and keep their endowments. Any strictly individually rational division of the sum of endowments can emerge in some subgame perfect equilibrium if discount factors are close enough to one. Each subgame perfect equilibrium, in which the parties’ decisions do not depend on past rejected proposals, leads to a weakly Pareto‐efficient agreement in the first period.     

Implementation of college admission rules

Summary We consider both Nash and strong Nash implementation of various matching rules for college admissions problems. We show that all such rules are supersolutions of the stable rule. Among these rules the lower bound stable rule is implementable in both senses. The upper bound Pareto and individually rational rule is strong Nash implementable yet it is not Nash implementable. Two corollaries of interest are the stable rule is the minimal (Nash or strong Nash) implementable solution that is Pareto optimal and individually rational, and the stable rule is the minimal (Nash or strong Nash) implementable extension of any of its subsolutions.We wish to thank Professor William Thomson for his efforts in supervision as well as his useful suggestions. We are grateful to the participants in his reading class, workshops at Bilkent University, University of Rochester, and in particular Jeffrey Banks, Stephen Ching, Bhaskar Dutta, Rangarajan Sundaram and an anonymous referee for their helpful comments.     

An efficiency characterization of plurality rule in collective choice problems

We consider the problem of selecting alternatives from a set of feasible alternatives over which each agent is endowed with a strict preference. We show that there is one and only one rule that satisfies anonymity, neutrality, efficiency, tops-only, and reinforcement. The rule is known as plurality rule, which selects the alternative(s) most preferred by the largest number of agents. I would like to thank William Thomson for helpful suggestions and discussions. I am grateful to Biung-Ghi Ju, Hyungjun Kim, and Yan-An Hwang for detailed comments. I am also indebted to the Editor and an anonymous referee for valuable suggestions. As usual, I am responsible for any remaining deficiency.     

Children and Theories of Social Justice

This paper is about children as subjects of social justice. It argues that economic welfare theory, utilitarianism, and other theories of justice based on utility theory assume rational individuals with stable preferences, and therefore cannot be applied to children. Libertarian justice treats children as possessions of the parents without rights of their own. A Rawlsian social contract, on the other hand, can be extended to include children. The main part of the paper consists of an attempt to sketch such an extension. It argues that justice to children is basic to Rawlsian justice, and that the Rawlsian case for equality is strengthened when children are taken into account. The principle of extensive liberty, when applied to children, must imply that children cannot properly be regarded as the possession of their parents.     

Nash implementing non-monotonic social choice rules by awards

Summary. By a slight generalization of the definition of implementation (called implementation by awards), Maskin monotonicity is no more needed for Nash implementation. In fact, a weaker condition, to which we refer as almost monotonicity is both necessary and sufficient for social choice correspondences to be Nash implementable by awards. Hence our framework paves the way to the Nash implementation of social choice rules which otherwise fail to be Nash implementable. In particular, the Pareto social choice rule, the majority rule and the strong core are almost monotonic (hence Nash implementable by awards) while they are not Maskin monotonic (hence fail to be Nash implementable in the standard framework).Received: 12 April 2004, Revised: 18 March 2005, JEL Classification Numbers: D 79.I thank François Maniquet, Efe Ok and Ipek Ozkal-Sanver for their valuable contributions. The paper is part of a project on Electoral System Design supported by Bilgi University Research Fund.     

Option exercise with temptation

This paper adopts the Gul and Pensendorfer self-control utility model to analyze an agent’s option exercise decision under uncertainty over an infinite horizon. The agent decides whether and when to do an irreversible activity. He is tempted by immediate gratification and suffers from self-control problems. The cost of self-control lowers the benefit from continuation or stopping and may erode the option value of waiting. When applied to the investment and exit problems, the model can generate the behavior of procrastination and preproperation. In addition, unlike the hyperbolic discounting model, the model here provides a unique prediction. I thank Drew Fudenberg, Bart Lipman, Neng Wang, and participants in the BU theory lunch workshop and in the Canadian Economic Theory Conference 2005 for helpful discussions. I am especially grateful for valuable suggestions from an anonymous referee and coeditor Steve Williamson. The BU ISP Seed Grant has supported this research.     

大型零售超市帕累托效应解析与客类营销研究

本文旨在探索帕累托效应在大型零售超市中的体现,并基于顾客分类下的销售额和利润额进行实证研究。研究发现,在大型零售行业,帕累托效应有别于通常意义下的20/80法则。利用帕累托效应新法则有助于企业实现低成本、高销售额和高盈利的目标。     

Non-constant discounting in continuous time

This paper derives the dynamic programming equation (DPE) to a differentiable Markov Perfect equilibrium in a problem with non-constant discounting and general functional forms. Beginning with a discrete stage model and taking the limit as the length of the stage goes to 0 leads to the DPE corresponding to the continuous time problem. The note discusses the multiplicity of equilibria under non-constant discounting, calculates the bounds of the set of candidate steady states, and Pareto ranks the equilibria.     

Coalitional manipulation and the Pareto rule

This paper examines aggregation procedures that map profiles of individual preferences into choice sets. An aggregation procedure is said to be “manipulable by a coalition” if there is a group of individuals, and a preference profile, such that every member of the group prefers the choice set obtained when they are misrepresenting their preferences, to the one obtained when they are honest. We show that the Pareto rule, which is an aggregation procedure that maps profiles of individual preferences into corresponding sets of Pareto optima, is not manipulable by any coalition of individuals under various behavioural assumptions which relate preferences over choice sets to preferences over alternatives. The non-manipulability of the Pareto rule by a single individual follows as a special case under these behavioural assumptions.     

A CHARACTERIZATION OF THE RAWLSIAN SOCIAL ORDERING OVER INFINITE UTILITY STREAMS

In this paper, we characterize a Rawlsian ordering over infinite utility streams using a fairness principle called Hammond Equity, as well as a weak efficiency principle, Sup Continuity, and a condition that links finite and infinite settings of distributive justice called Preference Continuity.     

Who never tells a lie?

I experimentally investigate the hypothesis that many people avoid lying even in a situation where doing so would result in a Pareto improvement. Replicating (Erat and Gneezy, Management Science 58, 723–733, 2012), I find that a significant fraction of subjects tell the truth in a sender-receiver game where both subjects earn a higher payoff when the partner makes an incorrect guess regarding the roll of a die. However, a non-incentivized questionnaire indicates that the vast majority of these subjects expected their partner not to follow their message. I conduct two new experiments explicitly designed to test for a ‘pure’ aversion to lying, and find no evidence for the existence of such a motivation. I discuss the implications of the findings for moral behavior and rule following more generally.     

Agglomeration and welfare: The core–periphery model in the light of Bentham,Kaldor, and Rawls

The objective of this paper is to apply different welfare approaches to the canonical model developed by Krugman, with the aim of comparing the only two possible market outcomes, i.e. agglomeration and dispersion. More precisely, we use the potential Pareto improvement criteria, as well as the utilitarian and Rawlsian welfare functions. No clear answer emerges for the following two reasons: (i) in general, there is indetermination when compensation schemes are used and (ii) the best outcome heavily depends on societal values regarding inequalities across individuals. However, simulations undertaken for plausible values of the main parameters suggest that there might be excessive agglomeration.