Prof. Dr.

Anke Gerber

Social Choice and Welfare

1. Exam Winter Term 2011/12

Important Instructions

1. There are 90 points on this 90 minutes exam.

2. You are not allowed to use any course material (books, slides, lecture notes
etc.).

3. Please answer the questions only on the paper that is handed out to you.

4. Please write your name on each sheet of paper, number the pages and leave
a margin (2.5cm) on the right of each page.

5. Please write legibly and make sure that your answers are coherent and
complete.

Good Luck!

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Exam, Social Choice and Welfare, February 9, 2012 2

Problem 1 (16 Points)

Let there be three alternatives x, y and z. Suppose Bob has the following prefer-
ences (I denotes indifference and P denotes strict preference):

xIy, zIy, zP x.

1. Is Bob’s weak preference relation R that can be derived from I and P above,
transitive? Argue why or why not. (9 points)

2. For the given preference relation, determine Bob’s choice set for
S = {x, y, z}.
(7 points)
Exam, Social Choice and Welfare, February 9, 2012 3

Problem 2 (42 Points)

1. What is an Arrovian social welfare function? (6 points)

2. Which are the conditions imposed on a social welfare function in Arrow’s

impossibility theorem? For each condition, either give a formal or an exact
verbal explanation. (24 points)

3. Consider the social aggregation rule which assigns to any profile of indi-
vidual preference orderings (R1 , . . . , Rn ) the social preference relation R
defined as follows: Let x and y be two alternatives. Then,

xP y ⇐⇒ xPi y for all individuals i = 1, . . . , n,

xIy ⇐⇒ neither xP y nor yP x,

where Pi is individual i’s strict preference relation corresponding to the weak

preference ordering Ri , and P (I) is society’s strict (indifference) relation
corresponding to the weak preference relation R.

Is this rule an Arrovian social welfare function if there are at least three
alternatives? Argue why or why not.
(12 points)
Exam, Social Choice and Welfare, February 9, 2012 4

Problem 3 (32 Points)

1. Explain Sen’s minimal liberalism condition.

(5 points)

2. Does the rule in Problem 2 satisfy Sen’s minimal liberalism condition?

Argue why or why not.
(6 points)

3. Explain Gibbard’s libertarian claim GL’.

(6 points)

4. Let there be two individuals who can either wear a white (w) or a black (b)
shirt and consider the alternatives ww, wb, bw, bb, where the first (second)
letter is individual 1’s (2’s) shirt color. The individuals’ strict preferences
over the four alternatives are

ww P1 bb P1 bw P1 wb
bb P2 bw P2 wb P2 ww.

(a) Does individual 1 have conditional or unconditional preferences? What

about individual 2? Give a reason for your answers.
(8 points)
(b) For the preferences given above and a social choice function, that sat-
isfies Gibbard’s libertarian claim GL’, determine the choice set for
S = {ww, wb, bw, bb}.
(7 points)