Lecture 1 - Social Choice Flashcards
(22 cards)
What is social choice in economics?
The aggregation of individual preferences into a collective decision for society.
What does the Pareto Principle (Unanimity) state?
If everyone prefers option X over Y, society should not choose Y.
What is egalitarianism in social choice?
The principle that all individuals should be treated equally, e.g., equal sharing of costs or profits.
What does Maximin focus on in social choice?
Maximizing the utility of the worst-off individual in society.
What is the Leximin rule?
A rule that orders utility vectors from worst to best and improves the least well-off first, then the next, and so on.
What is classical utilitarianism in social choice?
A method that adds all individuals’ utilities and chooses the outcome that maximizes the total.
In a line facility location problem, which location is Pareto efficient?
Any location that no one strictly prefers less, such as B or C depending on preferences.
Why is location C preferred in the Maximin rule on a line?
It minimizes the difference in utility and maximizes the minimum satisfaction.
What is the Leximin solution on a loop?
The location that gives the best possible outcome for the worst-off voter, then second worst, etc., in lexicographic order.
In the tree facility example, what does the Maximin solution select?
Location x, where the minimum utility is highest.
What does the Utilitarian solution select in the tree example?
Location C, where the total utility is maximized.
What is the Plurality voting rule?
The candidate with the most first-place votes wins.
What is the Condorcet winner?
A candidate who beats every other candidate in one-on-one majority comparisons.
What is the Borda Count method?
Candidates receive points based on their ranking, and the one with the most total points wins.
What is the Condorcet Paradox?
A situation where preferences cycle, e.g., A > B > C > A, so no clear majority winner exists.
Can the Borda winner differ from the Condorcet winner?
Yes, depending on the profile, the winners may not match.
What does Arrow’s Impossibility Theorem state?
No social choice rule can satisfy Unrestricted Domain, Pareto, and IIA unless it is dictatorial.
What is the Unrestricted Domain axiom?
Any possible preference orderings by individuals are allowed.
What does the Independence of Irrelevant Alternatives (IIA) mean?
Social ranking between two options should depend only on preferences over those two, not on others.
What is a dictatorial rule in social choice?
A system where one individual’s preferences always determine society’s preference.
Why is social choice theory important in economics?
It provides a framework to evaluate fairness, efficiency, and decision-making in groups.
What is a social ordering?
A consistent and complete preference ordering over alternatives for the entire society.
