Viewpoint: Decision-making in committees

Abstract .  This article reviews recent developments in the theory of committee decision-making. A committee consists of self-interested members who make a public decision by aggregating imperfect information dispersed among them according to a pre-specified decision rule. We focus on costly information acquisition, strategic information aggregation, and rules and processes that enhance the quality of the committee decision. Seeming inefficiencies of the committee decision-making process such as over-cautiousness, voting, and delay emerge as partial remedies to these incentive problems.     

Social orderings for the assignment of indivisible objects

In the assignment problem of indivisible objects with money, we study social ordering functions which satisfy the requirement that social orderings should be independent of changes in preferences over infeasible bundles. We combine this axiom with efficiency, consistency and equity axioms. Our result is that the only social ordering function satisfying those axioms is the leximin function in money utility.     

Market games with differential information and infinite dimensional commodity spaces: The core

Summary We provide an alternative proof of the existence of core allocations in exchange economies with differential information and infinite dimensional commodity spaces. We also identify a critical feature of information sharing rules that ensures nonemptiness of the core. In essence, the only condition we require on the sharing rules is that profitable insider trading be prohibited. In the absence of insider trading, balancedness is guaranteed and core nonemptiness follows.I thank Dan Arce, Erik Balder, Myrna Wooders, and Nicholas Yannelis for helpful comments. This paper is a greatly revised version of my paper entitled. A Variational Problem Arising in Market Games with Differential Information, written in August of 1991.     

Allocation rules for land division

This paper studies the classical land division problem formalized by Steinhaus (Econometrica 16 (1948) 101-104) in a multi-profile context. We propose a notion of an allocation rule for this setting.  We discuss several examples of rules and properties they may satisfy. Central among these properties is division independence: a parcel may be partitioned into smaller parcels, these smaller parcels allocated according to the rule, leaving a recommended allocation for the original parcel. In conjunction with two other normative properties, division independence is shown to imply the principle of utilitarianism.     

Weak Independence and Social Semi‐Orders

This paper provides variants of Arrow's impossibility theorem, which states that there exists no non‐dictatorial aggregation rule satisfying weak Pareto, independence of irrelevant alternatives and collective rationality. In this paper, independence of irrelevant alternatives and collective rationality are simultaneously relaxed. Weak independence is imposed instead of independence of irrelevant alternatives. Social preferences are assumed to satisfy the semi‐order properties of semi‐transitivity and the interval‐order property. We prove that there exists a vetoer when the number of alternatives is greater than or equal to six.     

Two criteria for social decisions

This paper studies the ethical underpinnings of two social criteria which are prominent in the literature dealing with the problem of evaluating allocations of several consumption goods in a population with heterogenous preferences. The Pazner-Schmeidler criterion [Pazner-Schmeidler, Egalitarian equivalent allocations: a new concept of economic equity, Quart. J. Econ. 92 (1978) 671-687] and the Egalitarian Walras criterion [Fleurbaey and Maniquet, Utilitarianism versus fairness in welfare economics, in: M. Salles, J.A. Weymark (Eds.), Justice, Political Liberalism and Utilitarianism: Themes from Harsanyi and Rawls, Cambridge University Press, Cambridge, 1996, forthcoming] are prima facie quite different. But it is shown here that these criteria are related to close variants of the fairness condition that an allocation is better when every individual bundle in it dominates the average consumption in another allocation. In addition, the results suggest that the Pazner-Schmeidler criterion can be viewed as the best extension of the Walrasian criterion to non-convex economies.     

Non-existence of monotone equilibria in games with correlated signals

Participation in economic games such as auctions is typically costly, which means that players (potential bidders) must consider whether to participate. Such decisions may be no less crucial than how to bid, and yet the literature has been mostly concerned with bidding, assuming an exogenously given number of bidders; see Krishna [Auction Theory, Academic Press, New York, 2002]. Landsberger and Tsirelson [Correlated signals against monotone equilibria, preprint SSRN 222308, Social Science Research Network Electronic Library, May 2000. Available online: http://papers.ssrn.com/abstract=222308] have shown that fundamental results established in symmetric auction theory with correlated signals, such as the existence of a monotone equilibrium, may not hold if participation decisions are part of equilibrium. The major goal of this paper is to illustrate and explain this result that may be considered counter intuitive given the emphasis placed on monotone equilibria in the auction literature.     

Virtual utility and the core for games with incomplete information

The core is extended to games with incomplete information. The feasible set is characterized by incentive-compatible mechanisms. Blocking is organized at the interim stage by an incentive-compatible mediation plan. Membership of the blocking coalition itself may be determined randomly by the blocking mediator. Nonemptiness of an interim fine core is proven for games with a balanced structure, independent types, and sidepayments. An offer of severance payments may be needed to inhibit blocking. Core allocations are characterized in terms of virtual-utility scales that generalize the weighted-utility scales of the inner core. Mechanisms that achieve core allocations are coalitionally durable.     

On demand responsiveness in additive cost sharing

Under partial responsibility, the ranking of cost shares should never contradict that of demands.The Solidarity axiom says that if agent i demands more, j should not pay more if k pays less. It characterizes the quasi-proportional methods, sharing cost in proportion to `rescaled' demands.Full responsibility rules out cross-subsidization for additively separable costs. Restricting solidarity to submodular cost characterizes the fixed-flow methods, containing the Shapley-Shubik and serial methods.The quasi-proportional methods meet—but most fixed-flow methods fail—Group Monotonicity: if a group of agents increase their demands, not all of them pay less. Serial cost sharing is an exception.     

The communication requirements of social choice rules and supporting budget sets

The paper examines the communication requirements of social choice rules when the (sincere) agents privately know their preferences. It shows that for a large class of choice rules, any minimally informative way to verify that a given alternative is in the choice rule is by verifying a “budget equilibrium”, i.e., that the alternative is optimal to each agent within a “budget set” given to him. Therefore, any communication mechanism realizing the choice rule must find a supporting budget equilibrium. We characterize the class of choice rules that have this property. Furthermore, for any rule from the class, we characterize the minimally informative messages (budget equilibria) verifying it. This characterization is used to identify the amount of communication needed to realize a choice rule, measured with the number of transmitted bits or real variables. Applications include efficiency in convex economies, exact or approximate surplus maximization in combinatorial auctions, the core in indivisible-good economies, and stable many-to-one matchings.     

Characterizations of bargaining solutions in production economies with unequal skills

In production economies with unequal skills, this paper characterizes bargaining solutions by using axioms on allocation rules rather than axioms on classical bargaining solutions. We introduce a new axiom, consistency w.r.t. technological innovations, so that the non-welfaristic characterizations of bargaining solutions in the production economies are provided. By the characterizations, we can classify the three bargaining solutions (the Nash, the Kalai-Smorodinsky, and the Egalitarian solutions) from the viewpoint of responsibility and compensation discussed by Dworkin.     

α‐SERIAL MECHANISMS FOR THE PROVISION OF AN EXCLUDABLE PUBLIC GOOD

We present a new class of “α‐serial mechanisms” for the provision of an excludable public good. Those mechanisms have a similar structure to the serial mechanism, but may let the non‐consumers pay a positive cost. They inherit desirable properties such as anonymity, envy‐freeness, Maskin monotonicity, and population monotonicity from the serial mechanism. We calculate the “maximal efficiency loss” and “maximal manipulation” of α‐serial mechanisms and point out a trade‐off between these two properties.     

A fair rule in minimum cost spanning tree problems

We study minimum cost spanning tree problems and define a cost sharing rule that satisfies many more properties than other rules in the literature. Furthermore, we provide an axiomatic characterization based on monotonicity properties.     

Collective choice under dichotomous preferences

Agents partition deterministic outcomes into good or bad. A mechanism selects a lottery over outcomes (time-shares). The probability of a good outcome is the canonical utility. The utilitarian mechanism averages over outcomes with largest “approval”. It is efficient, strategyproof, anonymous and neutral.We reach an impossibility if, in addition, each agent's utility is at least , where n is the number of agents; or is at least the fraction of good to feasible outcomes. We conjecture that no ex ante efficient and strategyproof mechanism guarantees a strictly positive utility to all agents, and prove a weaker statement.