Chapter Thirty-Two Welfare
Chapter Thirty-Two Welfare
What do we do in this chapter? We at the end of this course We are exploring a few very important topics of microeconomics Welfare economics is an extremely important topic
What do we do in this chapter? We at the end of this course We are exploring a few very important topics of microeconomics Welfare economics is an extremely important topic
Social Choice Different economic states will be preferred by different individuals. How can individual preferences be “aggregated”into a social preference over all possible economic states?
Social Choice Different economic states will be preferred by different individuals. How can individual preferences be “aggregated” into a social preference over all possible economic states?
Aggregating Preferences x,y,z denote different economic states. 3 agents;Bill,Bertha and Bob. Use simple majority voting to decide a state?
Aggregating Preferences x, y, z denote different economic states. 3 agents; Bill, Bertha and Bob. Use simple majority voting to decide a state?
Aggregating Preferences Bill Bertha Bob More preferred X y y Z X X Less preferred
Aggregating Preferences Bill Bertha Bob x y z y z x z x y More preferred Less preferred
Aggregating Preferences Majority Vote Results Bill Bertha Bob x beats y y beats z y z beats x y Z Z X
Aggregating Preferences Bill Bertha Bob x y z y z x z x y Majority Vote Results x beats y y beats z z beats x
Aggregating Preferences Majority Vote Results Bill Bertha Bob x beats y No y beats z socially X y Z z beats x best alternative！ y Z
Aggregating Preferences Bill Bertha Bob x y z y z x z x y Majority Vote Results x beats y y beats z z beats x No socially best alternative!
Aggregating Preferences Majority Vote Results Bill Bertha Bob x beats y No y beats z socially 十 y z beats x best alternative! y Z Majority voting does not always aggregate Z X transitive individual preferences into a transitive social preference
Aggregating Preferences Bill Bertha Bob x y z y z x z x y Majority Vote Results x beats y y beats z z beats x Majority voting does not always aggregate transitive individual preferences into a transitive social preference. No socially best alternative!
Aggregating Preferences Rank-order vote results Bill Bertha Bob (low score wins) X(1) y(1) Z(1) y(2) z(2) x(2) z(3) x(3) y(3)
Aggregating Preferences Bill Bertha Bob x(1) y(1) z(1) y(2) z(2) x(2) z(3) x(3) y(3) Rank-order vote results (low score wins)
Aggregating Preferences Rank-order vote results Bill Bertha Bob (low score wins) x-score 6 X(1) y(1) Z(1) y(2) z(2) X(2) z(3) x3) y(3)
Aggregating Preferences Bill Bertha Bob x(1) y(1) z(1) y(2) z(2) x(2) z(3) x(3) y(3) Rank-order vote results (low score wins). x-score = 6