Beruflich Dokumente
Kultur Dokumente
Pierre Dehez
CORE
University of Louvain
pierre.dehez@uclouvain.be
Outline
1. Preferences, utility and choices
2. Cardinal welfarism
distributive justice
utilitarism vs egalitarism
Nash bargaining
social welfare orderings
transferable utility games
3. Ordinal welfarism
References
Austen-Smith D. and J. Banks, Positive political theory I: Collective preferences,
University of Michigan Press, 1999.
Austen-Smith D. and J. Banks, Positive political theory II: Strategy and structure,
University of Michigan Press, 2005.
Brams S., Game theory and politics, Dover, 2004.
Brams S., Mathematics and democracy, Princeton University Press, 2008.
Moulin H., Axioms of cooperative decision making, Cambridge University Press, 1998.*
Moulin H., Fair division and collective welfare, MIT Press, 2003.*
Taylor A., Mathematics and politics, Springer-Verlag, 1995.
Peyton Young H., Equity. In theory and Practice, Princeton University Press, 1995.
Handbook of social choice and welfare, Elsevier, 2002.
* Moulin's monographies have inspired some of the material presented here.
3
Preferences
Preferences over a set A of alternatives are defined by a (binary)
relation over A:
a
b b is not preferred to a
from which the strict preference and indifference relations are deduced:
a
b a is preferred to b [a
b and b a]
b and b
a]
b or b
a] for all a, b A
- reflexivity: a
a for all a A
- transitivity: [a
b and b
c] a
Ordinal utilities
A preference preorder carries no information on the intensity of
preferences:
if a is preferred to b and c is preferred to d, we don't know
whether a is "more preferred" to b than c is preferred to d
u(a) u(b) a
b
7
u (a) u (b) 0 a
u (a) u (b) 0 a
Choices
Given a set of alternatives A and preferences
element in A:
a* A
a* a for all a A
or
a * maximizes u(a) on A
There may be several best elements. The set of solutions is called the
choice set.
9
a, b C ( A, ) a b
There is indifference between the elements of a choice set.
In the multivalued case, a neutral mechanism is necessary to eventually
retain a unique alternative.
For instance a random mechanism.
10
Cardinal utilities
Utilities are cardinal if utility difference have a meaning:
u and v au b, a 0
are utility functions representing the same preferences.
11
P ( 1 ,...,
n
)
L
( A)
n
12
13
( 1 ,...,
n
)
L
( A)
n
U ( A) u
u u1 (a),..., un (a) , a A
The problem is then to pick up a point in this set, possibly given the
specification of a disagreement point d in U(A).
14
(u1 ,..., un )
(v1 ,..., vn )
into .
15
(u1 ,..., un )
(v1 ,..., vn )
into .
16
(u1 ,..., un )
(v1 ,..., vn )
17
(u1 ,..., un )
(v1 ,..., vn )
(u1 ,..., un )
(0,..., 0)
18
(u1 ,..., un )
(v1 ,..., vn )
(a u1 b,..., a un b) (a v1 b,..., a vn b)
for all a, b , a 0.
19
2. Cardinal welfarism
20
21
(Aristoste)
22
Liberalism: the social order emerges from the interaction of free wills.
Methodological individualism is at the root of liberalism.
Individuals are characterized by values, rights and obligations.
Distributive justice has two sides:
- procedural justice: is the distribution of rights fair ?
- end-state justice: is the outcome fair ?
We start with a simple problem of sharing a resource.
23
25
ui ( x) u j ( x)
ui ( xi ) u j ( x j ) xi x j
27
Two definitions:
sum-fitness: maximization of the sum of the individual utilities
efficiency-fitness: Pareto optimality
Sum-fitness implies efficiency fitness.
28
How should the benevolent dictator use these four partially conflicting
principles very much depends upon the context.
Examples:
- access to the lifeboat,
- allocation of organs for transplant,
- seat rationing,
- political rights.
29
Lifeboat
exogenous rights: strict equality (lottery) or priority ranking
based on social status or wealth
compensation:
reward:
fitness:
30
Transplants
exogeneous rights: strict equality (lottery) or priority ranking
based on social status or wealth
compensation:
reward:
fitness:
31
fitness:
32
Political rights
fitness and reward: justify unequal voting rights which were
commonplace in the past
exogenous rights: justifies equal rights (beyond some obvious
limitations justified by fitness)
compensation:
33
Allocation methods
A given amount of some commodity has to be divided between
a given number of individuals and each individual has a claim.
The commodity could be a "good" or a "bad":
- for a good, individuals express demands
- for a bad, individuals have liabilities
There may be an excess or a deficit.
34
Data:
Notation:
for all S N : x( S ) xi
iS
35
Examples:
joint venture: E is the revenue generated by the cooperation
and the di's are the stand-alone revenues (surplus)
bankcruptcy: E is the firm's liquidation value and the di's are the
creditors' claims (deficit)
inheritance:
taxation:
Assumption:
( x1 ,..., xn ) ( E , d1 ,..., d n )
to any given allocation problem ( E , d1 ,..., d n ) such that x( N ) E.
37
di
xi
E
d (N )
and
E
xi x j
(di d j ) for all i and j
d (N )
38
x2
x1
d1
E
d1 d 2
x2
d2
E
d1 d 2
x1 x2 E
x2
PROP
d2
d2
x1
d1
d1
x1
39
1
xi di ( E d ( N ))
n
satisfies
E d (N ) 0
xi di for all i
xi x j di d j for all i and j
40
x2
x2 x1
x2 x1 (d 2 d1 )
E d1 d 2
2
E d 2 d1
x2
2
x1
ES
d2
d1d2
d1
x1
41
x2
x2 x1 (d 2 d1 )
x2 x1
ES
E d1 d 2
2
E d 2 d1
x2
2
d2
x1
d2d1
d1
x1
42
xi Max ( z, di )
n
43
y 2z
y = f(z)
y d1 z
d1 d 2
2d1
f ( z ) Max( z , d1 ) Max( z , d 2 )
d1+d2
d1
d2
d1
z
44
x2
x2 x1
UG
d2
d1
x1
45
x2
x2 x1
UG
x2 x1 (d 2 d1 )
ES
PROP
x2
d2
x1
d1
d2
d1d2
d1
x1
46
xi Min ( z, di )
n
y 2z
y = f(z)
y d2 z
d1+d2
d1 d 2
2d2
f ( z ) Min( z , d1 ) Min( z , d 2 )
d2
d2
d1
z
48
x2
x2 x1
d2
UG
d1
x1
49
y = f(z)
d1+d2
d1 d 2
d1
d2
y d1 d 2 2 z
d1
y d1 z
51
x2
x2 x1
x2 x1 (d 2 d1 )
E d1 d 2
2
E d 2 d1
x2
2
x1
d2
UL
d1d2
d1
x1
52
x2
d2
UG
PROP
UL
d1d2
d1
x1
53
x2
UG
ES
PROP
d2
UG
PROP
UL
d1d2
d1
x1
54
Proportional (surplus/deficit)
xi
E
di
d (N )
xi di
1
( E d ( N ))
n
xi Max ( z, di )
xi Max (di z , 0)
where z is such that
55
xi Max ( z, di )
xi Min ( z, di )
E
8 x4 8 and x5 6
5
E 14
3
8.7 x1 x2 x3 8.7
57
E
16 x1 20 and x2 16
5
E 36
3
14.7 x3 x4 x5 14.7
58
1
i such that di ( E d ( N )) 0
n
xi 0
59
1
zi di (40)
5
z (12, 8, 2, 0, 2)
x4 x5 0
1
zi di (26)
3
60
1
zi di (10)
5
z (18,14,8, 6, 4)
x (18,14,8, 6, 4)
61
deficit
E=
di =
20
16
10
20
PRO
6.7
5.3
3.3
2.7
UG
UL
11.3
7.3
1.3
PRO
13.3
10.7
6.7
5.3
UG
8.7
8.7
8.7
UL
16
12
PRO
16.7
13.3
8.3
6.7
UG
13
13
10
UL
18
14
PRO
26.7
21.3
13.3
10.7
UG
20
16
14.7
14.7
14.7
ES
24
20
14
12
10
PRO
40
32
20
16
12
UG
24
24
24
24
24
ES
32
28
22
20
18
40
50
surplus
80
120
60
62
Bankcruptcy: deficit
If creditors have equal exogenous rights, it is the proportional solution
that emerges. In reality, there are priorities that may be implied by
exogenous rights.
Medical supplies: deficit (di stands for the need of patient i)
The proportional solution is hardly acceptable in this context.
The uniform loss solution imposes itself if reducing the quantity of the
drug is equally bad for all (ex: insuline).
The uniform gain solution is appropriate if the drug is not essential (ex:
sleeping pills).
63
Uniform gain is the most naturel solution: it requires the less generous
donors to contribute first.
Fund raising: deficit
Uniform loss is not acceptable because it gives a uniform rebate
irrespectively of the contributions.
The proportional solution is definitely more appropriate.
64
d1 d 2 ... d n
- decrease 1's claim by (d1 d2) x = (d2, d2, d3, dn)
- decrease 1 and 2's claims by (d2 d3) x = (d3, d3, d3, d4, dn)
- decrease 1, 2 and 3's claims by (d3 d4) x = (d4, d4, d4, d4, dn)
65
66
67
1. Invariance to transfers
if i and j "merge" into a single individual, is the resulting
share equal to the sum of the individuals' shares ?
Only the proportional rule is invariant to transfers.
The uniform gain rule is not: merging leads to a smaller
or equal share.
68
2. Truncation property
In case of a deficit, a solution satisfies the truncation property
if truncating the claims to E
di di Min di , E
does not affect the resulting allocation.
The uniform gain rule satisfies the truncation property.
The uniform loss rule and the proportional rule do not.
69
3. Concession property
In case of a deficit, we define the concession of N\i to individual i by:
zi Max 0, E d ( N \ i)
Given an allocation rule, consider the following 2-step procedure:
- allocate zi to individual i
- apply the allocation rule to the problem of dividing what remains
E E zi
according to the reduced claims di di zi .
70
71
4. Consistency
An allocation rule is consistent if for all problem (E,d) and all
subsets S in N:
x ( E, d ) x
where x
( x(S ), d S )
( xi | i S ).
73
Application: taxation
Here E = T is the tax to be levied and di = yi represents i's taxable
income. It is assumed that we are in the deficit case: y( N ) T .
A taxation method is a function which associates taxes
t (T , y)
There are three classical taxation methods: flat tax, head (or poll) tax
and levelling tax.
74
yi y j
yi
T
75
y1 y2
t2
t 2 t1
t2 t1 ( y1 y2 )
t2
y2
t1
y1
y2
Head
Flat
Levelling
y1y2
y1
t1
76
y1 y2
t2
t 2 t1
t2 t1 ( y1 y2 )
t2
y2
t1
y1
y2
Head
Flat
Levelling
y1y2
y1
t1
77
Principles
1. Fair ranking
A higher income justifies both a higher tax burden and a higher aftertax income :
ti t j
yi y j
yi ti y j t j
Under this principle, equal incomes are taxed equally.
78
y1 y2 Max 0, t1 ( y1 y2 ) t2 Min y2 , t1
t2
t2 t1 ( y1 y2 )
t 2 t1
y2
Head
fair
Levelling
y1y2
y1
t1
79
2. Progressive tax
A higher income justifies a higher the tax rate:
tj
ti
ti
yi
yi y j
or
yi y j
tj yj
3. Regressive tax
A higher income justifies a lower the tax rate:
tj
ti
yi y j
yi y j
80
t2
T
t 2 y2
t1
y1
y2
y1y2
y1
t1
81
t2
y2
t 2 y2
t1
y1
y1y2
y1
t1
82
T.
83
t2
y2
y1y2
y1
t1
84
Equal sacrifice
85
ui ( yi ) ui ( yi ti ) z for all i
To avoid interpersonal utility comparisons, we postulate a common
utility function u (a kind of social norm):
u ( yi ) u ( yi ti ) z for all i
Mill proposed to use the Bernoulli utility function log y.
86
yi ti y j t j
yi y j
Equal relative sacrifice means choosing taxes in such a way that ratios
of utilities are equalized:
u ( yi ti )
z for all i
u ( yi )
87
u ( yi ti ) u ( y j t j ) u ( yi ) u ( y j )
yi y j yi ti y j t j
u ( yi ) u ( yi ti ) u ( y j ) u ( y j t j )
yi ti y j t j ti t j
88
89
where
1
xi zi E z1 z2 i 1, 2
2
zi Max 0, E d ( N \ i) E Min E, di i 1, 2
90
x1
1
E Min E , d1 Min E , d 2
x2
1
E Min E , d 2 Min E , d1
The contested garment rule satisfies both the truncation property and
the concession property. Actually, it is the only 2-person rule satisfying
these two properties. They define it.
An allocation rule has the contested garment property if, when
applied to a 2-person problem, it coincides with the contested garment
solution.
91
92
u ( x )
i
subject to x( N ) E
93
In the concave case, the two solutions are in some sense identical.
Furthermore, the three solutions studied earlier turns out to be special
cases.
94
The link between the two solutions when utility functions are
increasing and concave (and differentiable) appears by comparing
the revised definition of the egalitarian solution and the first order
condition associated to the utilitarian solution:
xi 0 ui ( xi ) Min j u j ( x j )
xi 0 ui( xi ) Max j u j ( x j )
Hence, the utilitarian solution with utility functions ui corresponds to
the egalitarian solution with utility functions ui'.
If concavity is quite natural in a context of income distribution,
convexity may be adequate in other context e.g. medical rationing.
95
96
xi 0 u (i xi ) Min jN u ( j x j )
i xi Min jN ( j x j )
because u is increasing. Hence i xi j x j for all i, j.
We observe that this solution is equivalent to the uniform gain solution
applied to the problem of dividing the amount
E ' E ( N )
with claims d i i .
97
subject to:
xi 0 i 1,..., n
xi 0 u(i xi ) Max jN u( j x j )
i xi Max jN ( j x j )
because u' is decreasing. Hence i xi j x j for all i, j.
98
Another example
Assume the utility functions are of the form
ui ( xi ) i u ( xi )
100
i u ( xi ) j u ( x j ) for all i, j
The utility function u being strictly increasing, shares and
productivities are negatively correlated:
i j xi x j
The utilitarian solution is defined by the 1st order conditions
i u ( xi ) j u ( x j ) for all i, j
By strict concavity, shares and productivities are now positively
correlated:
i j xi x j
101
102
Consider a game in strategic (normal) form (S1, S2, u1, u2) involving two
players.
We denote by A the set of consequences, allowing for correlated
strategies and we work directly on the expected utility set
U u
u u1 (a), u2 (a) , a A
correlated strategies
a2
b2
a1
2,1
0,0
b1
0,0
1,2
a2
b2
a1
p1
p2
b1
p3
p4
0 pi 1 and
1
104
u2
(1,2)
(0,0)
battle of sexes
a2
b2
a1
2,1
0,0
b1
0,0
1,2
(2,1)
u1
105
U
C7
U C8
u1
106
Bargaining problem need not result from a game situation. This is the
case of allocation problems like the bankcruptcy problem.
u2
L
C1 + C2 > L
C2
d = (0,0)
C1
u1
107
individual rationality:u* d
We look for a rule associating a solution to any bargaining problem
(U,d).
A bargaining problem (U,d) is symmetric if d1 = d2 and inter-changing
the players results in the same set U i.e. the 45 line
is a symmetry axis of U.
108
u2
d2
d
U
d1
u1
109
45
110
(U,d)
112
u2
battle of sexes
(1,2)
3 3
( , )
2 2
(0,0)
(2,1)
u1
113
114
ui di
vi
bi d i
b2=5
(4.5, 4)
d2=3
b2-d2=2
(2.5, 1)
1
(0.5, 0.5)
1
d1=2
b1-d1=5
b1=7
115
(U,d)
d
117
(V,d ) U
(U,d ) = (V,d )
UV
118
(U,d)
u1
119
u2
u*
u1
120
121
u2
Ci > L /2
C2
L/2
u*
L/2
C1
u1
122
u2
C2 < L /2
u1* = L C2
u2* = C2
L/2
C2
u*
L/2
C1
u1
123
u*
u1
124
125
u2
b
u*
"idal" point
d2
d
U
d1
u1
126
u2
u1
127
u2
bi = Ci
ui* =
Ci
L
C1 + C2
C2
u*
C1
u1
128
129
(u1,..., un )
(u1,..., un )
u u
i
u u
i
- egalitarian (leximin):
(u1 ,..., un )
where
(v1,..., vn )
Assume first that all individuals value equally being (10) and not being
onboard (1).
Utilitarism recommends choosing one of the 3-person arrangments.
Egalitarism recommends the same solution:
(1, 1, 10, 10, 10)
in
1
10
2
6
3
6
4
5
5
3
out
134
in
1
10
2
6
3
6
4
5
5
3
out
obtained from:
(0, 1, 3, 6, 6)
(0, 1, 3, 5, 6)
(0, 1, 1, 6, 10)
(0, 1, 1, 5, 10)
135
W (u1,..., un ) f (ui )
for all (u1,,un).
136
(u1,..., un )
2. Symmetry:
138
(ui , a)
(u i , a) (ui , b)
(u i , b) for all a, b
where u i (u j | j i ).
Hence social welfare orderings depends only on the welfare of the
individuals who are affected.
Proposition Any social welfare ordering represented by an
additive collective utility function satisfies the above property.
Under continuity, the converse is true: ignoring unconcerned
individual implies additivity.
139
u1 u2
ui ui for all i 1, 2
u1 u1 a and u2 u2 a
then (u1,..., un )
(u1 ,..., un ).
i.e. operating a transfer that reduces the inequality between any two
individuals does not lead to a less preferred utility profile.
140
(u1,..., un )
f (u ) f (u) 0
i
f (u ) f (u) 0
i
f (u ) u p
f (u ) log u
1
W (u1 ,..., un ) p for some p 0 f (u ) u p
ui
142
Maximizing
log u
log ui
Hence, log uiis called the Nash collective utility function. It is the
W (u1,..., un ) ui
is obtained by setting p = 1 in the first family.
143
W (u1,..., un ) f (ui )
meets the Pigou-Dalton transfer principle if and only if the function f
is concave.
For instance, the quadratic utility function
144
146
W (u1,..., un ) ui p
converges to the leximin welfare ordering for p .
147
UT
U(A)
EG = LEX
u1 + u2 = constant
u1
148
U(A)
EG = LEX
UT
u1
149
UT
u1 = u2
LEX
U(A)
u1 + u2 = constant
u1
150
u2
u1 = u2
NASH
U(A)
u1 u2 = constant
u1
151
(u1 ,..., un )
(T (u1 ),..., T (un ))
(v1 ,..., vn )
(u1 ,..., un )
(v1 ,..., vn )
(u1 ,..., un )
(0,..., 0)
(u1 ,..., un )
(v1 ,..., vn )
Proposition The Nash social welfare ordering is the only social welfare
ordering satisfying independence of utility scales.
154
Consider the "linear" city represented by the interval [0,1] along which
individuals are located:
individual i is located at ti [0,1]
ui ( x) x ti
155
1
{i | ti x}
2
157
ui ( x) x ti
In the extreme case of a continuum, the egalitarian solution consists in
locating the facility anywhere because there is an individual in any
location.
158
x f ( x)dx (1 x) f ( x)dx 2 1
0
1
2
UT
0
x
159
1
160
Assume first that each individual likes one and only one program
and let nk denote the number of individuals who like program k:
161
163
164
165
TU-games
Given a collectivity N = {1,,n}, a cooperative game with transferable
utility is defined by a "characteristic function" v that associates a real
number to any "coalition" S N. Here v(S) is the worth of coalition S,
understood as the minimum it can secure for itself, independently of
what the players outside S do.
The set function v is assumed to be superadditive:
167
| x( N ) v( N ), x( S ) v( S ) for all S N }
168
Shapley value
To each permutation = (i1,,in) N of the players is associated a
marginal contribution vector () defined by:
(k 2,..., n)
1
( N , v)
( )
n! N
170
i ( N , v)
SN
( S i )
( s 1)!(n s)!
where the weights are given by n ( s)
n!
The Shapley value is the unique allocation rule satisfying:
- symmetry:
contributions (substitute
treatments of equals)
1 1
n 2 2 ( , )
2 2
n3
2 (1,1)
1 1 1
3 ( , , )
3 6 3
3 (1, 2,1)
1 1 1 1
n 4 4 ( , , , )
4 12 12 4
n5
4 (1,3,3,1)
1 1 1 1 1
, , , )
5 20 30 20 5
5 ( ,
1 1 1 1 1 1
n 6 6 ( , , , , , )
6 30 60 60 30 6
where n ( s ) Cns11
6 (1,5,10,10,5,1)
(n 1)!
is the number of coalitions to which a given player belongs
(n s )!( s 1)!
n ( s ) n ( s)
1
for all s
n
172
The Shapley value is "fair" because it treats equal players equally and
does not remunerate non-contributing players. The nucleolus instead is
concerned with reducing the highest loss of the coalitions as measured
by the difference between wath a coalition is worth and what it gets:
e( x, S ) v(S ) x(S )
is the "excess" associated to imputation x and coalition S.
The least core is the set of imputations that minimize the largest excess:
Min xI ( N , v ) Max S N e( x, S )
S , N
173
(x )
( x) for all x I ( N , v)
174
( N , v) { x ( p,0, p3 p) p2 p p3 }
In particular, if p3 = p2, then
( N , v) { ( p3 ,0,0) }
175
123
200
100
132
300
213
200
100
231
300
312
300
321
300
1/6
1100
200
500
( N , v) (
v(i) = 0
v(12) = p2 = 200
v(13) = p3 = 300
v(23) = 0
v(123) = p3 = 300
e( p , S ) p
0
for S {1}
for S {2} and S {13}
(0, 0, p2 p, p p3 , p p3 , p) for p [ p2 , p ]
(0, 0, p p3 , p p3 , p2 p, p) for p [ p, p3 ]
p2 p3
where p
2
177
p2
p p3
p 2
2
0
p2
p3
(p2-p3)/2
p2-p3
p2 p
- p3
178
p3 p2
p3 p2
( N , v)
,0,
2
2
179
x( N \ j ) v( N \ j ) F (m 1)
where
x( N \ j ) x( N ) x j F (m) x j
Hence,
x j F (m) F (m 1)
Workers are substitutes: they get the same wage under the Shapley value.
We need only to compute what the value allocates to the landlord.
1 ( N , v)
m 1
F (k 1)
F (k )
m 1
m 1
1
k 1
k 1
182
F(m)
F(k)
1 x F(k)
F(2)
F(1)
k k+1
m
183
decreasing
returns
F(m)
Workers
L>W
Landlord
m
F (k )
k 0
m
184
constant
returns
F(m)
Workers
W=L
Landlord
m
185
increasing
returns
F(m)
T
Workers
L<W
Landlord
0
m
186
mixed
returns
F(m)
Workers
Landlord
m
187
d1=100
d2=200
d3=300
E=100
33.3
33.3
33.3
E=200
50
75
75
E=300
50
100
150
EQUAL
UL
188
Aumann and Mashler (1985) have shown that the nucleolus actually
reproduces the Talmud figures for the following TU-game:
v(S ) Max 0, E d ( N \ S )
Here v(S) represents the minimum coalition S can get:
it is the amount left once the outsiders have possibly
got their claims
In particular, v(N) = E.
The above game is known as "bankcruptcy game".
189
E = 200
d = (100,200,300)
v(S ) Max 0, E d ( N \ S )
v(i) = 0 i = 1,2,3
v(12) = v(13) = 0
v(23) = 100
v(123) = 200
x1 , x2 , x3 0
x1 x2 x3 200 x1 100
x2 x3 100
190
x1
(200,0,0)
200
I ( N , v)
x2
200
x3
200
x2 + x3 = 100
( N , v)
(0, 200,0)
x2 + x3 = 200
x1 = 0
(0,0, 200)
191
E = 200
d = (100,200,300)
v(1) = 0
v(2) = 0
v(3) = 0
v(12) = 0
v(13) = 0
v(23) = 100
v(123) = 200
v(S ) Max 0, E d ( N \ S )
1
123
200
132
200
213
200
231
100
100
312
200
321
100
100
1/6
200
500
500
(200,0,0)
(100, 100, 0)
(100, 0, 100)
Equal
Nucleolus
Shapley
(0, 200,0)
(0,0, 200)
193
We observe that the four vertices of the core are precisely the four
marginal contribution vectors:
(0, 0, 200)
(0, 200, 0)
(100, 0, 100)
(100, 100, 0)
with multiplicity 2
with multiplicity 2
with multiplicity 1
with multiplicity 1
E = 200
EQUAL
66.6
66.6
66.6
PROP
33.3
66.6
100
UG
66.6
66.6
66.6
UL
50
150
Nucleolus
50
75
75
Shapley
33.3
83.3
83.3
195
E = 100
d = (100,200,300)
v(S ) Max 0, E d ( N \ S )
v(i) = 0 i = 1,2,3
v(12) = v(13) = v(23) = 0
v(123) = 200
x1 , x2 , x3 0
x1 x2 x3 200
( N , v) I ( N , v )
200
3
196
E = 300
d = (100,200,300)
v(i) = 0 i = 1,2,3
v(12) = 0
v(13) = 100
v(23) = 200
v(123) = 300
v(S ) Max 0, E d ( N \ S )
x1 , x2 , x3 0
x1 x2 x3 300
x1 x3 100
x2 x3 200
197
(300,0,0)
x1 + x3 = 100
x2 + x3 = 200
( N , v)
(0, 300,0)
(0,0, 300)
198
E = 300
d = (100,200,300)
v(i) = 0 i = 1,2,3
v(12) = 0
v(13) = 100
v(23) = 200
v(123) = 300
v(S ) Max 0, E d ( N \ S )
1
123
300
132
200
100
213
300
231
100
200
312
100
200
321
100
200
1/6
300
600
900
(300,0,0)
x1 + x3 = 200
x1 + x2 = 150
x1 + x3 = 100
x2 + x3 = 200
Equal
Shapley = Nucleolus
(0, 300,0)
(0,0, 300)
200
(300,0,0)
(100, 0, 200)
(100, 200, 0)
(0, 300,0)
(0,200, 100)
(0,0, 300)
201
123
300
132
200
100
213
300
231
100
200
312
100
200
321
100
200
We observe again that the four vertices of the core are precisely
the four marginal contribution vectors:
(0, 0, 300)
(0, 200, 100)
(100, 0, 200)
(100, 200, 0)
with multiplicity 2
with multiplicity 1
with multiplicity 1
with multiplicity 2
[ui (h) | i N , h M ]
ui(h) is the reservation price of agent i for house h i.e. the maximum
price i is willing to pay for house h.
It is the value that agent i attach to house h expressed in monetary
terms.
203
v(S ) Max f F
iS
ui ( f (i))
Here v(S) is the cost of the houses that are optimally allocated to the
members of coalition S.
Consequently, (N,v) is a cost game. It is concave and thereby also
subadditive.
204
u1
u2
u3
C(2) = 9
C(3) = 9
C(12) = 21
12
C(13) = 21
C(23) = 15
C(123) = 27
205
123
12
132
12
213
12
231
12
312
12
321
12
1/6
72
45
45
207
y1 = 12
y2 9
6 y2 9
y3 9
6 y3 9
y1 y2 21
y1 y3 21
y2 y3 15
(12,6,9)
(12,9,6)
(12,7.5,7.5)
(12,9,6)
(12,6,9)
set of
imputations
(27,0,0)
x2 = 6
x3 = 6
(9,9,9)
x2 = 9
x3 = 9
x1 = 12
(0,27,0)
(0,0,27)
209
3. Ordinal welfarism
210
F : L( A) n A
It associates to any profile p a subset of "winning" alternatives
F(p) A. It is the collective choice set.
F : L( A) n L( A)
211
212
pi 1 1
pi 0 0
1
213
3 in favour of 0
2 in favour of 1
F(p) = {1}
F(p) = {0,1}
F(p) =
So ties are allowed.
The natural neutral mechanism to break a tie is the flipping of a coin.
215
Simple majority
F ( p) {1}
F ( p) {0}
n
if pi
2
i 1
n
n
if pi
2
i 1
n
n
F ( p) {0,1} if pi
2
i 1
a tie is not a possible outcome of simple majority if n is odd
216
Unanimity
F ( p) {1}
if
p
i 1
F ( p) {0} if
p
i 1
F ( p)
n
0
if 0 pi n
i 1
217
218
219
Anonymity
A voting procedure F is anonymous if it symmetric in its n variables:
For instance,
Neutrality
A voting procedure F is neutral if permuting the choice of every voter
results in a permutation of the outcome:
for any p P, F(1 p) = 1 F(p)
where 1 = (1,1,,1).
For instance,
221
n
F ( p) G pi
i 1
for some increasing function G.
222
1 1 n
4
if
pi
10 n i 1
10
F ( p ) {0} otherwise
223
1 F ( p) and p p 1 F ( p)
0 F ( p) and p p 0 F ( p)
where p p means pi pi for all i.
224
225
if
p
i 1
F ( p) {0}
q,
n
q n, such that:
2
if n pi q
i 1
p
i 1
nq
F ( p) {0,1} otherwise
n 1
q
if n is odd
2
n
q 1 if n is even
2
226
227
228
229
230
231
n=7
a
b
c
d
e
Borda b
a
d
b
e
c
a
d
b
e
c
a
14
c
b
d
e
a
b
17
c
d
b
a
e
c
16
b
c
d
a
e
e
c
d
b
a
d
16
e
7
232
11 with preferences b
233
2
a
3
a
4
c
5
c
6
b
7
e
235
a
b
c
d
e
a
d
b
e
c
a
d
b
e
c
c
b
d
e
a
c
d
b
a
e
b
c
d
a
e
e
c
d
b
a
delete d
236
a
b
c
e
a
b
e
c
a
b
e
c
c
b
e
a
c
b
a
e
b
c
a
e
e
c
b
a
delete b and e
237
a
c
a
c
a
c
c
a
c
a
c
a
c
a
delete a
Hare c
238
a
d
b
a
d
b
c
b
d
c
d
b
b
c
d
e
c
d
d
e
e
c
e
c
e
a
a
e
a
e
b
a
239
Pareto criteria
If all voters prefer x to y, then y cannot be in the social choice set.
240
Condorcet criteria
If there is a Condorcet winner, it must be in the social choice set.
a
241
Monotonicity criteria
Let the alternative x be in the social choice set for a given preference
profile p.
If the preference profile p is modified by moving up x in the ordering
of some voter,...
... x should remain in the social choice set.
242
243
Pareto
Condorcet
Monotonicity
Independance
Plurality
Yes
No
Yes
No
Borda
Yes
No
Yes
No
Hare
Yes
No
No
No
Agenda
No
Yes
Yes
No
Dictator
Yes
No
Yes
Yes
244
245
1 to 4
5 to 7
8 and 9
249
1, 2 and 3
a
4 and 5
b
250
1 to 5
a
6 to 9
e
10 to 12
d
13 to 15
c
16 and 17
b
251
1
a
2
c
3
c
252
1 to 7
a
8 to 12
c
13 to 16
b
17
b
253
1 to 7
8 to 12
13 to 16
17
254
255
256
1, 2 and 3
a
4 and 5
c
a
a is the social choice
257
1, 2 and 3
a
4 and 5
b
258
259
260
262
263
Abstention
18/654
147/654
Yes
End
489/654 No
Abstention
29/657
Yes
No
288/654
338/659
Abstention
1/659
Berlin
Bonn or Berlin
332/659
Bonn
264
Questions:
Which voting procedure should have been adopted ?
Does the actual voting procedure produce enough
information to enable a reconstruction of the preferences
of the 659 representatives ?
Would a different voting procedure have produced
a different outcome ?
265
Bonn-Berlin:
B/A: 371/286
B/C: 337/320
A/C: 227/430
A = 513
B = 708
C = 750
6. Berlin and Bonn would have probably won under approval voting.
*"The fatal vote: Bonn vs Berlin", Finanzarchiv, Neue Folge, Heft 1, 1993, 1-20
266
F ( p) F ( p) F ( p) F ( p) F ( p p)
where p p is the combined preference profile of N N'.
267
Proposition (Young)
A voting procedure is anonymous, neutral and consistent
if and only if it is a scoring rule.
268
269
Among the properties, the most desirable ones are certainly Pareto and
monotonicity. Condorcet comes next.
Independence appears as a strong requirement. It has indeed
be the object of much discussion in the literature.
We observe the following facts:
270
No Condorcet winner!
Whatever is the social choice, 2/3 of the voters are unhappy and
moreover, they agree on an other alternative !
271
b and b
c but c
272
273
274
b
c
a
b
c
a
b
c
a
b
b
a
276
277
Strong monotonicity
A social choice procedure F is strongly monotone if for all preference
profile p and q in , and any alternative a in A:
if q is obtained from p by lifting a up in some preference list,
then either F(q) = F(p) or F(q) = a
ui ( F (u )) ui ( F (vi , ui ))
for all u U An , for all vi U A and for all i.
280
b twice
c twice
a twice
281
Remark:
283
284
are transitive.
285
y and x
z for all i N
x and z
x for all i N
z or z
y for all i N
b
287
288
n 1
2
290
Proof: Let D(A) be the set of individual preferences on A such that for
all profiles p in D(A)n, CW(p) exists.
S N(a,b| p) =
The set N(a,b| p) is a strict majority and the set N(a,b| (qS,pN\S))
coincides with the set N(a,b| p). Hence b cannot be Condorcet
winner under the "false" profile (qS,pN\S).
291