25,658 research outputs found

    Extended paretian rules and relative utilitarianism

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    This paper introduces the 'Extended Pareto' axiom on Social welfare functions and gives a characterization of the axiom when it is assumed that the Social Welfare Functions that satisfy it in a framework of preferences over lotteries also satisfy the restrictions (on the domain and range of preferences) implied by the von-Neumann-Morgenstern axioms. With the addition of two other axioms: Anonymity and Weak IIA* it is shown that there is a unique Social Welfare Function called Relative Utilitarianism that consists of normalizing individual utilities between zero and one and then adding them

    Extended paretian rules and relative utilitarianism.

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    This paper introduces the 'Extended Pareto' axiom on Social welfare functions and gives a characterization of the axiom when it is assumed that the Social Welfare Functions that satisfy it in a framework of preferences over lotteries also satisfy the restrictions (on the domain and range of preferences) implied by the von-Neumann-Morgenstern axioms. With the addition of two other axioms: Anonymity and Weak IIA* it is shown that there is a unique Social Welfare Function called Relative Utilitarianism that consists of normalizing individual utilities between zero and one and then adding them.Group Preferences; Multi-profile;

    Bayesian Group Belief

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    If a group is modelled as a single Bayesian agent, what should its beliefs be? I propose an axiomatic model that connects group beliefs to beliefs of group members, who are themselves modelled as Bayesian agents, possibly with different priors and different information. Group beliefs are proven to take a simple multiplicative form if people''s information is independent, and a more complex form if information overlaps arbitrarily. This shows that group beliefs can incorporate all information spread over the individuals without the individuals having to communicate their (possibly complex and hard-to-describe) private information; communicating prior and posterior beliefs suffices.mathematical economics;

    Opinion Pooling under Asymmetric Information

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    If each member of a group assigns a certain probability to a hypothesis, what probability should the collective as a whole assign? More generally, how should individual probability functions be merged into a single collective one? I investigate this question in case that the individual probability functions are based on different information sets. Under suitable assumptions, I present a simple solution to this aggregation problem, and a more complex solution that can cope with any overlaps between different persons' information sets. The solutions are derived from an axiomatic system that models the individuals as well as the collective as Bayesian rational agents. Two notable features are that the solutions may be parameter-free, and that they incorporate each individual's information although the individuals need not communicate their (perhaps very complex) information, but rather reveal only the resulting probabilities.opinion pooling, probability aggregation, decision theory, social choice theory, Bayesian rationality, Bayesian aggregation, information

    Do irrelevant commodities matter?

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    We study how to evaluate allocations independently of individual preferences over unavailable commodities. We prove impossibility results suggesting that such evaluations encounter serious difficulties. This is related to the well-known problem of performing international comparisons of standard of living across countries with different consumption goods. We show how possibility results can be retrieved with restrictions on the domain of preferences, on the application of the independence axiom or on the set of allocations to be ranked. Such restrictions appear more plausible when the objects of evaluation are allocations of composite commodities, characteristics or human functionings rather than ordinary commodities.consumer preferences; social choice; independence of irrelevant alternatives; characteristics; functionings

    Evaluating assumptions of scales for subjective assessment of thermal environments – Do laypersons perceive them the way, we researchers believe?

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    How many consumers are rational?

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    Rationality places strong restrictions on individual consumer behavior. This paper is concerned with assessing the validity of the integrability constraints imposed by standard utility maximization, arising in classical consumer demand analysis. More specifically, we characterize the testable implications of negative semidefiniteness and symmetry of the Slutsky matrix across a heterogeneous population without assuming anything on the functional form of individual preferences. In the same spirit, homogeneity of degree zero is being considered. Our approach employs nonseparable models and is centered around a conditional independence assumption, which is sufficiently general to allow for endogenous regressors. It is the only substantial assumption a researcher has to specify in this model, and has to be evaluated with particular care. Finally, we apply all concepts to British household data: We show that rationality is an acceptable description for large parts of the population, regardless of whether we test on single or composite households.

    Scotland as an Optimal Currency Area

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    Since the Scottish independence movement has reached the point that there will be a referendum on Scottish independence this September, the issue of whether the Scotland is optimal currency areas is very topical.In this paper we review the microeconomic foundations of an optimal currency area. We test these microeconomic foundations. We find that the UK, Scotland and the UK without Scotland meet the microeconomic criteria for a common currency area. While adopting a common currency is ultimately a political decision, these results imply that the broadest of these areas, the UK, is the optimal currency area in the sense of minimizing transactions costs.We do find differences in the UK less Scotland and Scotland economies in loan data. We further find that neither the euro bloc nor the euro bloc including Scotland meet the microeconomic criteria for a common currency area. In the event of a “yes” vote for Scottish independence, the immediate problem facing the Scottish government is to decide on an exchange rate regime that is seen as credible by the financial markets to avoid a flight of capital. How policymakers chooses between alternative exchange rate regimes is currently a topic for hot debate in central banking circles and the process of a monetary union breaking up is a fascinating area worthy of future research

    Demographic Faultlines and Creativity In Diverse Groups

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    Despite the oft made argument that demographic diversity should enhance creativity, little is known about this relationship. We propose that group diversity, measured in terms of demographic faultlines, affects creativity through its effects on group members’ felt psychological safety to express their diverse ideas and the quality of information sharing that takes place across subgroup boundaries. Further, we propose that the relationship between faultlines and creativity will be moderated by task interdependence and equality of subgroup sizes. Finally, we provide suggestions for how organizations can establish norms for self-verification and use accountability techniques to enhance creativity in diverse groups
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