Individual and Collective Choice and Social Welfare

Following Nick Baigent’s argument that one must go “behind the veil of preference” (Baigent, Jpn Econ Rev 46(1):88–101, 1995) to be able to develop a satisfactory theory of rational behaviour, we propose to analyse potential intrapersonal conflicts caused by different reasons, goals or motivations to choose one option over another, which may make the development of a coherent preference impossible. We do this by presenting an extensive, but certainly not exhaustive overview of psychological research on intrapersonal conflict, its influence on preference reversal (and hence on incoherent behaviour), on psychological well-being and on motivational and behavioural changes over time. We then briefly describe our own theory of choice under conflicting motivations (Arlegi and Teschl, Working Papers of the Department of Economics DT 1208, Public University of Navarre, 2012), which is a first attempt at putting psychological insights into intrapersonal conflict into an axiomatic economic context.

Rationality does not require of preferences that they be complete. Nor therefore that they be transitive: Suzumura consistency suffices. This paper examines the implications of these claims for the theory of rational choice. I propose a new choice rule—Strong Maximality—and argue that it better captures rational preference-based choice than other more familiar rules. Suzumura consistency of preferences is shown to be both necessary and sufficient for non-empty strongly maximal choice. Finally conditions on a choice function are stated that are necessary and sufficient for it to be rationalisable in terms of a Suzumura consistent preference relation.

The standard theory of rational choice in economics considers an agent’s choices to be rational if and only if the agent makes her choices in different choice situations on the basis of a fixed preference ordering defined over the set of all possible options. This implies that a rational agent’s preferences cannot be context-dependent. This paper outlines a simple framework for defining context-dependence of preferences and for discussing relationships between context-dependent preferences and the notion of rationality.

This paper presents a development of the transformation semigroup of economic choice automata as a subgroup of the semigroup (monoid) of partial functions defined over the states of a finite state machine. The classes of consistency behavior considered are those rationalized by linear orders, weak orders, quasi-transitive relations and non-rationalizable path independent choice functions. For each of these classes of choice behavior, a particular class of lattice is identified as the action semigroup that drives the automaton. Given these characterizations, several features of the choice behavior are considered. In particular, the simplifying interval property of path independent choice, the importance of the distributive property of quasi-transitive rational choice in reducing the complexity of dynamic choice is addressed. Based on the algebraic structure of semiautomata implementing path independent choice functions it is possible to rank these semiautomata by the mathematical power required to implement a particular class of choice functions. This provides a means for ranking these machines by their “implementation complexity”. Dually, the computational complexity of constructing a semiautomaton that implements a particular class of choice functions is investigated. It is seen that these complexities are inversely related.

In this paper we analyze within the framework of individual choice theory assignments of moral responsibility. For this purpose we introduce a so-called responsibility function that describes for any choice situation the alternatives for which the agent would be deemed responsible if she were to choose one of them in that situation. We show under which conditions a responsibility function can be rationalized by information about which courses of action constitute reasonable alternatives to other courses of action. After thus having characterized one way of assigning responsibility, we show that it leads to what we call the agency paradox: a rational person will in many cases not be responsible for her actions. It is argued that a decision rule that is formally the same as the ‘never choose the uniquely largest’-rule characterized by Baigent and Gaertner (1996) circumvents the paradox. Turning to a possible counterargument to the analysis presented, we conclude by suggesting that moral responsibility should be seen as a criterion for the assessment of the quality of our choice sets rather than as a consideration that is relevant when making our choices.

We provide a brief survey of some literature on intertemporal social choice theory in a multi-profile setting. As is well-known, Arrow’s impossibility result hinges on the assumption that the population is finite. For infinite populations, there exist non-dictatorial social welfare functions satisfying Arrow’s axioms and they can be described by their corresponding collections of decisive coalitions. We review contributions that explore whether this possibility in the infinite-population context allows for a richer class of social welfare functions in an intergenerational model. Different notions of stationarity formulated for individual and for social preferences are examined.

In this paper we give a general characterization of the minimal Maskin monotonic extensions of Condorcet consistent tournament solutions. We then compute the minimal Maskin monotonic extensions for the following rules: The top-cycle, the uncovered set, the iterated uncovered set, the minimal covering set and the Copeland rule. Moreover, we characterize the minimal Maskin monotonic extensions of the social choice rules that are generated by the top-cycle, the uncovered set, the iterated uncovered set, and the minimal covering set via the majority rule. We also give results establishing the relation between the minimal Maskin monotonic extensions in the tournament environment and the social choice environment.

We study approval voting in a setting with a fixed profile of individuals’ choices and variable societies. Four properties each linking choices made by a group of individuals to choices by its various subgroups are introduced, and are used for characterizing approval voting.

In the line opened by Kalai and Muller (J Econ Theory 16:457–469, 1977), we explore new conditions on preference domains which make it possible to avoid Arrow’s impossibility result. In our main theorem, we provide a complete characterization of the domains admitting nondictatorial Arrovian social welfare functions with ties (i.e. including indifference in the range) by introducing a notion of strict decomposability. In the proof, we use integer programming tools, following an approach first applied to social choice theory by Sethuraman et al. (Math Oper Res 28:309–326, 2003; J Econ Theory 128:232–254, 2006). In order to obtain a representation of Arrovian social welfare functions whose range can include indifference, we generalize Sethuraman et al.’s work and specify integer programs in which variables are allowed to assume values in the set \(\{0, \frac{1} {2},1\}\): indeed, we show that there exists a one-to-one correspondence between the solutions of an integer program defined on this set and the set of all Arrovian social welfare functions—without restrictions on the range.

Collective decision making problems can be seen as finding an outcome that is “closest” to a concept of “consensus”. Nitzan (1981) introduced “Closeness to Unanimity Procedure” as a first example to this approach and showed that the Borda rule is the closest to unanimity under the Kemeny (1959) distance. Elkind et al. (2009) generalized this concept as distance-rationalizability, and showed that all scoring rules can be distance rationalized via a class of distance functions, which we call scoring distances. In this paper, we propose another class of distances, i.e., weighted distances, introduced in Can (2014). This class is a generalization of the Kemeny distance that rationalizes the generalization of the Borda rule, i.e., scoring rules. Hence the results here extend those in Nitzan (1981) and reveal the broader connection between Kemeny-like distances and Borda-like voting rules.

Introducing production to a family bargaining model immediately sets the stage for the axiom of Independence of Irrelevant Alternative (IIA). Requiring that bargaining solutions satisfy IIA rules out the Kalai-Smorodinsky solution, but the broad class of Generalized Utilitarian bargaining solutions satisfies this axiom. I show that In the case of utility profiles that lead to almost transferable utility, IIA has no bite because the utility possibility frontier before and after production coincide. Almost TU is an important subdomain of all utility profiles and much broader than transferable utility, but it is still restrictive. Hence IIA is a desirable axiom of family bargaining solutions. I focus on bargaining within the family but the argument for IIA as a relevant property of bargaining solutions applies to other bargaining problems as well in which goods are produced or second period renegotiation takes place.

A free trade is always Pareto-improving. But some “free trades” are actually forced in the sense that they reflect the trader’s poverty rather than his or her preferences. We propose a rigorous concept of forced trade, and apply it to the ethical evaluation of Walrasian equilibria.

This paper surveys and extends some recent contributions on the theory of exploitation as the unequal exchange of labour. A model of dynamic economies with heterogeneous optimising agents is presented which encompasses the models used in the literature as special cases. It is shown that the notion of exploitation is logically coherent and can be meaningfully analysed in such a general framework. It is then shown that the axiomatic approach of social choice theory can be adopted to explore the normative foundations of the notion of exploitation. Finally, it is argued that purely distributive approaches to exploitation are not entirely compelling and a notion of dominance, or unequal power is necessary.

Merit wants are a multi-faceted concept cutting through a complex array of problems associated with different levels of analysis. They are considered in this paper as a shorthand notion for concerns that are respectable and important, assuming a broadly individualist conception of welfare. So why are merit wants not a firmly established part of modern normative economics, given that simplifying, but still meaningful notions are suitable as conceptual starting point for a research program? In this paper I try to link the answer to this question with making explicit three levels of problems (limits of reason, higher order preferences, collective choice) which may be useful to locate and scrutinize various interpretations of and approaches to merit wants.

This chapter interprets John Stuart Mill’s liberal version of utilitarianism, which is extraordinary in at least three respects. First, Mill distinguishes among different kinds of utilities conceived as pleasant feelings (including relief from pain) of different intrinsic qualities irrespective of quantity. A feeling of security associated with the moral sentiment of justice is said to be higher in quality as pleasure than any competing kind of pleasure, where justice is conceived in terms of a social code that distributes and sanctions equal rights and duties for all who have a voice in constructing the rules. Second, the utilitarian aggregation procedure is restricted to this higher moral kind of utility and may be depicted as a social welfare functional which operates within a limited sphere of morality and law. The sole purpose of the aggregation procedure is to generate an optimal social code of justice so that individuals are then free from coercive interference to act and pursue non-moral kinds of pleasures in accordance with their optimal rights and duties recognized under the code. Finally, Mill never discusses a standard utilitarian aggregation mechanism and seems instead to have in mind a democratic voting procedure, which can be seen as a purely ordinalist utilitarian procedure, for aggregating over the higher moral kind of utilities expressed by moral individuals who are competently acquainted with the different kinds of utilities.

This paper demonstrates that there is a discrepancy between the ideas expressed by Lindahl in 1919 and the current-day definition of Lindahl equilibrium. It describes how the ideas expressed by Lindahl developed into the equilibrium concept for public good economies that now carries Lindahl’s name. The paper also touches on a seemingly forgotten equilibrium concept for public good economies known as ratio equilibrium, and explains that from an axiomatic perspective this equilibrium concept is a better fit with the ideas expressed by Lindahl.

The interview was conducted by Constanze Binder (CB) Miriam Teschl (MT) and Yongsheng Xu (YX) via email over a period of a few weeks in the Summer/Fall of 2014.