Prof. Dr.

Anke Gerber

Social Choice and Welfare

2. Exam Winter Term 2012/13

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!

1
Exam, Social Choice and Welfare, March 25, 2013 2

Problem 1 (18 Points)

Ann is a student and she is looking for an apartment. She is only interested in
the size of an apartment and in its distance to university. More precisely, her
preferences over apartments are as follows:
– If one apartment is more than 10 kilometers away from the university and
the other apartment is at most 10 kilometers away, then Ann strictly prefers
the apartment that is at most 10 kilometers away.

– If two apartments both are more than 10 kilometers away from the univer-
sity, then Ann is indifferent between the two apartments.

– If two apartments both are at most 10 kilometers away from the university,
then Ann strictly prefers the larger apartment whenever the two apartments
differ in size, and she is indifferent whenever the two apartments have the
same size.

Suppose there are four apartments, A, B, C, and D, with the following size (in
square meter) and distance (in kilometers) to university:

A B C D
Size 30 25 15 40
Distance 15 5 2 11

1. For every pair of apartments in the set {A, B, C, D}, determine whether
Ann strictly prefers one apartment over the other or whether she is indif-
ferent.
(12 Points)

2. Determine Ann’s choice set from the set of apartments {A, B, C, D}.
(6 Points)
Exam, Social Choice and Welfare, March 25, 2013 3

Problem 2 (38 Points)

Let there be n individuals in society. Consider the social aggregation rule which
assigns to every profile of individual preference orderings (R1 , . . . , Rn ) the social
preference relation R defined as follows: For every two alternatives x and y,

– if xRi y for all individuals i = 1, . . . , n, then xRy.

– if there are two individuals i and j such that xPi y and yPj x, then xIy.

Here, Pi (Pj ) denotes individual i’s (j’s) strict preference relation corresponding
to the weak preference ordering Ri (Rj ), and I denotes society’s indifference
relation corresponding to the weak preference relation R.

1. Is this rule an Arrovian social welfare function on an unrestricted domain

of individual preference orderings if there are at least three alternatives?
Argue why or why not.
(18 Points)

2. Does this aggregation rule satisfy the conditions in Arrow’s impossibility

theorem? For each condition, argue why it is satisfied or why it is not.
(20 Points)
Exam, Social Choice and Welfare, March 25, 2013 4

Problem 3 (34 Points)

1. Let there be three alternatives x, y, and z, and three individuals 1, 2, and

3. The individuals’ preference orderings are represented by the following
utility functions, where u(x, i), u(y, i), and u(z, i), denotes individual i’s
utility for alternatives x, y, and z:

Individual 1: u(x, 1) = 3, u(y, 1) = 1, u(z, 1) = 0

Individual 2: u(x, 2) = 1, u(y, 2) = 5, u(z, 2) = 4
Individual 3: u(x, 3) = 5, u(y, 3) = 0, u(z, 3) = 6

(a) Determine the social preference relation over every pair of alternatives
in the set {x, y, z}, that results under the simple majority voting rule.
Determine the choice set from {x, y, z} under the simple majority vot-
ing rule.
(10 Points)
(b) Determine the social preference relation over every pair of alternatives
in the set {x, y, z}, that results under the utilitarian rule. Determine
the choice set from {x, y, z} under the utilitarian rule.
(10 Points)
(c) Determine the social preference relation over every pair of alternatives
in the set {x, y, z}, that results under the leximin rule. Determine the
choice set from {x, y, z} under the leximin rule.
(14 Points)