Consequences, opportunities, and generalized consequentialism and non-consequentialism

In a recent paper published in Journal of Economic Theory (101 (2001) 423-436), by Suzumura and Xu, an analytical framework was developed, which allowed us to characterize the concept of consequentialism and non-consequentialism. To simplify matters, however, the treatment in that paper was confined only to the cases where no trade-off exists between consequential considerations, which reflect the individual's preferences over alternatives, and non-consequential considerations, which reflect the individual's concern over richness of opportunities from which alternatives are chosen. The present paper represents a generalization of our previous framework, which can now accommodate the situations where consequential considerations and non-consequential considerations actively interact. The analysis covers both the cases of finite and infinite number of alternatives.     

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.     

Presidential Address: Welfare Economics Beyond Welfarist-Consequentialism

Capitalizing on the recent work in social choice theory, I re-examine the foundations of post-Pigovian welfare economics and social choice theory. The structure of the "old" and "new" welfare economics is critically scrutinized, and the culprits of the poverty of welfare economics as well as of Arrovian social choice theory are boiled down to their common informational basis, referred to as welfarist-consequentialism . Alternative avenues that may be taken in an attempt to escape from the poverty of normative economics are identified and examined. These are focused on interpersonal comparisons of welfare levels, opportunity preferences and the procedural fairness of social choice.
JEL Classification Numbers: B21, D63, D71.     

Extended social ordering functions for rationalizing fair allocation rules as game forms in the sense of Rawls and Sen

We examine the possibility of constructing social ordering functions, each of which associates a social ordering over the feasible pairs of allocations and allocation rules with each simple production economy. Three axioms on the admissible class of social ordering functions are introduced, which embody the values of procedural fairness, non-welfaristic egalitarianism, and welfaristic consequentialism, respectively. The logical compatibility of these axioms and their lexicographic combinations subject to constraints are examined. Two social ordering functions that give priority to procedural values rather than to consequential values are identified. These two can uniformly rationalize a nice allocation rule in terms of the values of procedural fairness, non-welfaristic egalitarianism, and Pareto efficiency.     

The Boosting Effect of E-WOM on Macro-level Consumption: A Cross-Industry Empirical Analysis in Japan

In this study, we carry out an empirical analysis on how electronic word-of-mouth (hereinafter “e-WOM”) marketing on e-WOM websites and electronic-commerce websites on the Internet boosts consumption on a macro-level. In our analysis, we conduct a model analysis of consumer behavior using data composed of more than 30,000 questionnaire surveys and quantitatively find the elasticity coefficient of the boost to consumption by performing a two-step GMM (generalized method of moments), which uses instrumental variables. The results of the analysis show e-WOM significantly increased expenditures in six fields: computers, electrical appliances, etc.; music; hobbies; clothing, accessories, etc.; beauty products, etc.; and goods for everyday life, etc. Furthermore, there was no field that had a significantly negative value. These results showed that, in the majority of the target fields, e-WOM had not only the effect of winning customers from the competition, but also the effect of boosting consumption on a macro-level. In addition, even from people’s subjective evaluations, there were many in all the generational groups who said that e-WOM boosted expenditures.     

Slow price reactions to analysts’ recommendation revisions

This study explores the reasons for the slow price reactions to analysts’ recommendation revisions. We predict that analysts’ recommendation revisions contain earnings-related information that is not incorporated in analysts’ earnings forecasts and that the slow price reaction is attributable to a gradual incorporation of this earnings-related information into stock prices. We find that, consistent with our prediction, stocks with recommendation upgrades subsequently experience more upward earnings forecast revisions than stocks with recommendation downgrades, and that the differences in subsequent stock returns between upgraded and downgraded stocks is attributable to differences between subsequent earnings forecast (especially, FY2 earnings forecast) revisions.