Fair social decision under uncertainty and belief disagreements

This paper aims to address two issues related to simultaneous aggregation of utilities and beliefs. The first one is related to how to integrate both inequality and uncertainty considerations into social decision making. The second one is related to how social decision should take disagreements in beliefs into account. To accomplish this, whereas individuals are assumed to abide by Savage model’s of subjective expected utility, society is assumed to prescribe, either to each individual when the ex ante individual well-being is favored or to itself when the ex post individual well-being is favored, acting in accordance with the maximin expected utility theory of Gilboa and Schmeidler (J Math Econ 18:141–153, 1989). Furthermore, it adapts an ex ante Pareto-type condition proposed by Gayer et al. (J Legal Stud 43:151–171, 2014), which says that a prospect Pareto dominates another one if the former gives a higher expected utility than the latter one, for each individual, for all individuals’ beliefs. In the context where the ex ante individual welfare is favored, our ex ante Pareto-type condition is shown to be equivalent to social utility taking the form of a MaxMinMin social welfare function, as well as to the individual set of priors being contained within the range of individual beliefs. However, when the ex post individual welfare is favored, the same Pareto-type condition is shown to be equivalent to social utility taking the form of a MaxMinMin social welfare function, as well as to the social set of priors containing only weighted averages of individual beliefs

On the geometric mean method for incomplete pairwise comparisons

When creating the ranking based on the pairwise comparisons very often, we face difficulties in completing all the results of direct comparisons. In this case, the solution is to use the ranking method based on the incomplete PC matrix. The article presents the extension of the well known geometric mean method for incomplete PC matrices. The description of the methods is accompanied by theoretical considerations showing the existence of the solution and the optimality of the proposed approach.Comment: 15 page

Ranking Investment Projects

This paper describes conditions under which one investment project dominates a second project in terms of net present value, irrespective of the choice of the discount rate. The resulting partial ordering of projects has certain similarities to stochastic dominance. However, the structure of the net present value function leads to characterizations that are quite specific to this context. Our theorems use Bernstein's (1915) innovative results on the representation and approximation of polynomials, as well as other general results from the theory of equations, to characterize the partial ordering. We also show how the ranking is altered when the range of discount rates is limited or the rate varies period by period.

A comparative study on Spanish regions’ investment capacity in a budgetary discipline anticipated scenario, by means of multicriteria Promethee method.

The principle of the budgetary discipline, compulsory for the Spanish regions by the Law 18/2001, December 12th [General Law of Budgetary Stability] and the Organic Law 5/2001, December 13th, complementary to the former one, established in the frame of the European Agreement for Stability and Growth, can generate conflicting situations with those Spanish regions which investment capacity depends on external borrowing. This paper deals with the corresponding relative position of the different regions, according to its investment capacity, using for that purpose a simulation exercise, in which we advance the budgetary stability constraint for the period 1997-2000. In this paper, the public financial activity is treated, for each region, through different public revenue and expenditure ratios per capita. This situation leads to consider a multicriteria Promethee method as the apropriate one to obtain a global ranking for all of them. In the opinion of Al-Shemmeri, Al-Kloub and Rearman (1997), this method is the most adequate one because of the following advantages: public authorities, as decision takers, can understand easily the results, regardless the knowledge they may have about it; the method uses understandable economic parameters; the method avoids distorting scale effects among different alternatives and, as well, makes possible the deviation evaluation between alternatives and, finally, allows for sensibility analysis.