1 SocialChoice Annotated

Social Choice and Welfare
Week 1
Johannes Boehm
Sciences Po, Le Havre Campus
Fall 2023
Social Choices These annotations will contain notes that are designed to help understand the material.
• In this lecture, we will study situations like the following:

A group of people
have to choose out of a list of possible alternatives
that affect all members of the group
who have (typically opposing) preferences over alternatives.
1
E.g. for Brexit:
Many Examples
• Group of People: could be “residents of the UK”
• The description sounds abstract, but it fits many common situations: • Alternatives to choose from: could be “Remain/Customs Union/No-deal”
• Preferences: people have preferences over these three options. E.g. someone may
prefer a customs union over remain, and remain over no deal.
• Brexit or not? • Kidney exchange
• Fish market • Ad placements on Google
• Stock market • Job placements in

administration for ENA
• Presidential elections students.
• School choice • Burkini or not?

2
E.g. for Brexit:
Many Examples
• Alternatives to choose from: could be “Remain/Customs Union/No-deal”
2
E.g. for Brexit:
Many Examples
2
E.g. for Brexit:
Many Examples
2
E.g. for Brexit:
Many Examples
2
E.g. for Brexit:
Many Examples
2
E.g. for Brexit:
Many Examples
auto insurance - Google Search 4/ 3/ 13 11:40 AM
+You Search Images Maps Play YouTube News Gmail Drive Calendar More • Alternatives to choose from: could be “Remain/Customs Union/No-deal”
auto insurance Sign in
Web Images Maps Shopping Blogs More Search tools
About 346,000,000 results (0.31 seconds) prefer a customs union over remain, and remain over no deal.
Ads related to auto insurance
GEICO Auto Insurance - GEICO could save you over $500

www.geico.com/
How much could you save?
3,212 people +1'd or follow GEICO Insurance
$29 Cheap Auto Insurance - NYC.USAutoInsuranceNow.com Map for auto insurance

nyc.usautoinsurancenow.com/
Cheapest NYC Auto Insurance. Lowest Rates From $28.99 / Month!
Ads
State Farm® Car Insurance 1 (877) 749 5589
www.statefarm.com/ AARP® 50+ Auto Insurance
Switch & Save Up To $480! Get To A Better State® Today. aarp.thehartford.com/
Get a Free Auto Insurance Quote.
You Could Save $375* in Minutes!
Esurance Online Car Insurance — Get Your Quote & Save on Auto ...
www.esurance.com/
See how much you can save on reliable, affordable car insurance. Get your free quote "The Cheapest Insurance"
online or over the phone and compare auto insurance rates in minutes. www.onlineautoinsurance.com/
Compare 13 Auto Insurance Quotes
Customer Login - Contact Us - Car Insurance - Health Insurance
Save Time and Money! Only 4 Minutes
Auto Insurance & Car Insurance Quotes - Allstate Cheapest NY Car Insurance
www.allstate.com/auto-insurance.aspx www.dcapinsurance.com/Manhattan
Customized car insurance coverage options, discounts galore and amazing features. 1 (866) 908 9949
Get a free online quote and speak to a dedicated Allstate agent. Insure your car for less today!
DCAP Auto Insurance. Quote now
Auto Insurance: Get an Online Car Insurance Rate | Progressive
www.progressive.com › Insurance Choices Auto Insurance Policy
Get a car insurance rate in minutes with Progressive. You can save hundreds on auto www.travelers.com/
insurance; and good drivers get even better savings with Snapshot®. 1 (866) 679 1542
Get a Free Fast Insurance Quote.
Travelers Could Save You $432!
Country-Wide Insurance Co 40 Wall St
https://www.cwico.com/ New York
3 Google reviews (212) 943-4510 $19 * Cheap Car Insurance
www.quotelab.com/New-York
Campbell Solberg Associates Inc
www.campbellsolberg.com/
110 William St
New York
(New York Residents Only)
Get a Free Quote & Save 55-75%! 2
Google+ page (800) 874-6172
Progressive® Insurance
Institutions
• Individual preferences need to be aggregated.

• Preference aggregation mechanisms are organized within particular
institutions.
“Institutions are the rules of the game in a society, or more formally, are
the humanly devised constraints that shape human interaction” (Douglass
North, 1990)
• Examples:
• Markets where money is the means of exchange (fish market; stock market;
spectrum or frequency allocation)
• Other money-free allocation methods (kidney exchange; job placements at ENA;
school choice; course allocation)
• Voting (presidential elections; Brexit)
• Delegation (construction of a bridge)
3
Institutions
Questions:
How well can we expect these institutions to perform? Can we design better
(optimal) ones?
In this course, we will generally take an institution-free approach start from

(simple) fundamental situations and try to derive institutional solutions.
4
Ranking Movie Villains
We need to create a ranking of the best movie villains of all time.
Three candidates:
Hannibal Lecter in Silence of the Lambs (1991)
The Joker in The Dark Knight (2008)
Darth Vader in Star Wars (1977)

5
I show the preferences of 1, 2, and 3 here through the vertical placement of the images. Ms
A Problem with Majority Voting 1. prefers Hannibal Lecter over the Joker, and the Joker over Darth Vader. Mr 2 prefers the
Joker over Darth Vader, and Darth Vader over Hannibal Lecter.
Ranking the best movie villains of all time: 3 candidates In the majority voting contest, we pin two candidates against each other, and ask the agents
to vote. If Hannibal is pitted against the Joker, Hannibal is chosen, because Ms 1 and Ms 3
prefer him over the Joker and vote for him. Similarly, the Joker wins against Darth Vader,
and Darth Vader wins against Hannibal.
6
Majority Voting Contest: In the majority voting contest, we pin two candidates against each other, and ask the agents
Ms. 1 Mr. 2 Ms. 3
6
Ms. 1 Mr. 2 Ms. 3
vs. ⇒
6
Ms. 1 Mr. 2 Ms. 3
vs. ⇒
vs. ⇒
6
Ms. 1 Mr. 2 Ms. 3
vs. ⇒
vs. ⇒
vs. ⇒
6
Ms. 1 Mr. 2 Ms. 3
vs. ⇒
vs. ⇒
vs. ⇒
Social Preferences:
6
Ms. 1 Mr. 2 Ms. 3
vs. ⇒
vs. ⇒
vs. ⇒
Social Preferences:
6
The resulting social preferences are non-transitive: they have cycles.
A real-world example In each of the pie charts, the fraction that prefers one over the other is plotted. We get:
Remain is prefered over the May deal, No deal is prefered over Remain, and the May deal
is prefered over No Deal.
7
Formalizing the problem
We will describe a Social Choice Problem as follows:
• N individuals indexed by i.
• A set of alternatives A = {a, b, · · · }.
• Each individual has a (strict) preference ordering over alternatives i
• So a i b means i prefers a to b.
• Complete preferences: all alternatives can be compared by i .
• Transitivity: a i b AND b i c ⇒ a i c... That is, no cycles.
8
The Social Welfare function maps the individuals preferences into some kind of relation
Social Welfare Functions that should reflect the preferences of that group of individuals. We say that it “aggregates”
the preferences of the individuals.
We want to generate a complete and transitive social ranking ∗ , that:
Plurality rule is where everyone votes for their prefered option, and the social ranking is
• is our principle for deciding which outcomes are “good” for society. the ranking of votes. Unless there are ties (which is unlikely to happen when there are
many individuals) it is a SWF.
• naturally, should depend on the preferences of individuals.
This dependence is described abstractly by a Social Welfare Function:
F : Preference profiles → Rankings of alternatives

(1 , · · · , N ) 7→ ∗
EXAMPLES:
Is majority voting a social welfare function?
Is plurality rule a social welfare function? 9
Minimal requirements for SWF: Universal Domain
Definition (Universal Domain)

A SWF satisfies universal domain (UD) if every possible preference profile results
in a well-defined (i.e. complete and transitive) social ranking.
10
Minimal requirements for SWF: Universal Domain
Definition (Universal Domain)

A SWF satisfies universal domain (UD) if every possible preference profile results
in a well-defined (i.e. complete and transitive) social ranking.
Majority voting does not satisfy (UD) because it does not always produce a
transitive social ranking (see example before).
10
Minimal requirements for SWF: Unanimity
Definition (Pareto efficiency or Unanimity)

A SWF satisfies Pareto efficiency or unanimity if whenever all individuals prefer an
alternative a to another alternative b (mathematically: ∀i : a i b), then the
output social ranking ranks a above b (a ∗ b).
11
Independence of Irrelevant Alternatives (IIA)
Definition (Independence of Irrelevant Alternatives)
A SWF satisfies IIA if the social ordering of any two alternatives a versus b
depends only on the individual orderings of a versus b. Formally, if we are given
two preference profiles which are identical in terms of how individuals order a
and b, then the SWF should output the same ordering of a versus b for the two
profiles.
• In other words: under IIA, the social ranking of two alternatives a and b
should only depend on how individuals prefer a over b (or vice versa), but
not on anything else (like how they compare a and b to other alternatives).
• The general idea is that the society’s ranking of two alternatives should be
independent of context. In our social choice problem, context is provided by
other alternatives available.
• Let’s do an example.
12
IIA counterexample - 2002 Presidential election
Jacques Chirac: 19.88% Jean Saint-Josse: 4.23%

Jean-Marie Le Pen: 16.86% Alain Madelin: 3.91%
Lionel Jospin: 16.18% Robert Hue: 3.37%
François Bayrou: 6.84% Bruno Mégret: 2.34%
Arlette Laguiller: 5.72% Christiane Taubira: 2.32%
Jean-Pierre Chevènement: 5.33% Corinne Lepage: 1.88%
Noël Mamère: 5.25% Christine Boutin: 1.19%
Olivier Besancenot: 4.25% Daniel Gluckstein: 0.47%
• Aussme that everybody voted for their top-ranked candidate. Moreover,

assume that all individuals who voted for Chevènement had the following
preferences: for all such i,
Chevènement i Jospin i all other 13
• Now suppose Chevènement steps down. All his supporters now pick Jospin, This example is not ideal, because the set of alternatives has changed by Chevenement
dropping out. A better example would be to change people’s preferences so that everyone
resulting in a different social ordering.
ranks Chevenement last. But that’s a less realistic one.
Lionel Jospin: 21.51% Jean Saint-Josse: 4.23% The background story is that Chevenement was a centrist candidate that people blamed for
drawing votes away from Jospin, thereby leading Jospin to drop to third place and enabling
Jacques Chirac: 19.88% Alain Madelin: 3.91%
Jean-Marie Le Pen to enter the second round of presidential elections.
Jean-Marie Le Pen: 16.86% Robert Hue: 3.37%
François Bayrou: 6.84% Bruno Mégret: 2.34% This example shows that plurality rule does not satisfy IIA.
Arlette Laguiller: 5.72% Christiane Taubira: 2.32%
Noël Mamère: 5.25% Corinne Lepage: 1.88%
Olivier Besancenot: 4.25% Christine Boutin: 1.19%
Daniel Gluckstein: 0.47%
• IIA is violated: in both cases the preferences of Chirac vs Jospin are the same,
yet the social ranking under the voting rule changes.
In each of these examples, the SWF maps the top sets of preferences into the ones on the
Practice bottom. Are IIA and PE satisfied? Yes, if green, red if no.
Ms. 1 Mr. 2 Ms. 3 In the first example (players 2 and 3 have Joker and Vader switched), PE is satisfied because
Ms. 1 Mr. 2 Ms. 3
Joker i Darth Vader for all i, and Joker F Darth Vader. IIA is not satisfied: between the
left and the right, the relative positions of Darth Vader and Hannibal Lecter are unchanged
in each i’s preferences, but they swap ranking in the SWF. In the second example, that has
been fixed. The third example ranks the Joker in F last, which is a violation of PE: everyone
prefers the Joker over Vader.
⇓ F(.)
⇓ F(.)

15
Ms. 1 Mr. 2 Ms. 3 Ms. 1 Mr. 2 Ms. 3 In the first example (players 2 and 3 have Joker and Vader switched), PE is satisfied because
⇓ F(.) ⇓ F(.)

15
⇓ F(.) ⇓ F(.)

15
IIA X PE ✓
⇓ F(.) ⇓ F(.)

15
⇓ F(.) ⇓ F(.)

15
IIA ✓ PE ✓
⇓ F(.) ⇓ F(.)

15
⇓ F(.) ⇓ F(.)

15
IIA ✓ PE X
A good SWF?
• We have argued that a good SWF should satisfy UD, Pareto and IIA.
• But these are minimal requirements.
• Note that they say very little about equity, fairness etc.
• So a good SWF should satisfy at least these criteria, but probably more.
• To illustrate, here is a SWF that satisfies UD, Pareto and IIA but is clearly not a
good SWF.
16
Example: Dictatorship This example shows that for every setting, at least there exists a SWF that satisfies UD, PE,
and IIA — but it’s obviously still not a very satisfying SWF.
Definition (Dictatorship)
A SWF is a dictatorship if there is some individual i such that the social ranking is
always exactly i regardless of the preferences of other individuals.
• It satisfies UD because it always produces a well-defined ordering ∗ =i .
• It satisfies PE because if everyone prefers a to b, then so does i.
• It satisfies IIA, because the social ordering of any pair a, b only depends on
i’s ordering of a, b.
17
Example: Borda Rule In the Borda Rule, you essentially “give points” to each candidate: N to your top choice,
N − 1 to your second-best choice, etc. The Borda Rule ranking is then the ranking of points.
• Let ri (a) be the rank of a in Li .

∑N
• a’s score is s(a) = i=1 ri (a).
• Rank alternatives so that
a B(L) b ⇔ s(a) ≤ s(b)

Jean-Charles de Borda
(1733-1799)
18
Ms. 1 Mr. 2 Ms. 3 Candidate Score
(1733-1799)
18
Ms. 1 Mr. 2 Ms. 3 Candidate Score
1+3+1=5
3+2+3=8
2+1+2=5
⇓
(1733-1799)
∼
18
Arrow’s Impossibility Theorem is one of the most important theoretical results in all of
Arrow’s Impossibility Theorem economics and political science. It is often meant when people say “you cannot aggregate
preferences in a satisfying way”.
#A is the number of alternatives to choose from.

Theorem (Arrow, 1963)
Suppose #A ≥ 3. If a Social Welfare Function F has Universal Domain, is
Independent of Irrelevant Alternatives and Pareto Efficient then it is Dictatorial.
A negative result: maybe we can get a positive result if we limit ourselves to

Social Choice Functions...
If #A = 2, then majority voting is a well-defined SWF and satisfies all properties.
19
Social Choice Function Perhaps we have been to ambitious by trying to find a whole “ranking” that reflects the
preferences of the individuals. Perhaps we should be satisfied if we can find a single
We want to generate a social choice a∗ that: outcome that reflects the preferences of the individuals. As an example, in a presidential
election we don’t care about which candidates should be ranked fifth or sixth, we just
• is our principle for deciding which outcome is “good” for society. care about which candidate to be elected for president. That’s what we are trying to do
• naturally, should depend on the preferences of individuals. with Social Choice Functions: for every set of individual’s preferences, we want to find an
outcome that is “chosen” by these individuals.
This dependence is described abstractly by a Social Choice Function:
f : Preference profiles → Alternatives

(1 , · · · , N ) 7→ a∗
20
This slide describes some properties of a SCF. Pareto Efficiency, Monotonicity, and Universal
Minimal Requirements for SCF Domain are desirable. Dictatorial is probably not.
A Social Choice Function f Pareto Efficiency: if everybody ranks a top, then the SCF must choose a.
• is Pareto Efficient if whenever a is unanimously most preferred for a profile L Monotonicity: Suppose an SCF selects outcome a from a particular set of individuals’ pref-
then f(L1 , · · · , LN ) = a. erences. Then the SCF must also select a from any set of individual’s preferences where a
• is Monotonic if whenever f(1 , · · · , N ) = a and, for every i, and every has the same or higher (better) rank as in the former set of preferences. Go through the
proof in the set of extra slides to practice applying the concept of monotonicity.
alternative b, a profile ′i ranks a above b whenever i does (i.e. a does not
go down in any ranking), then f(′1 , · · · , ′N ) = a. Dictatorial: there is one individual whose top choice is always the choice of the SCF, re-
• is Dictatorial if there is some individual i such that f(1 , · · · , n ) is always i’s gardless of how the others’ preferences look like.
preferred alternative.
UD: as before: every set of individual’s preferences yields a social choice under the SCF.
• has Universal Domain if f generates a choice for every preference profile.
EXAMPLE OF SCF:
Pick the best alternative from any social ranking output by a SWF. 21
Muller-Satterthwaite Theorem Muller-Satterthwaite is the equivalent to Arrow’s Theorem but for SCF’s: the only SCF’s
that satisfy UD, M, and PE are the Dictatorial ones. In that sense, limiting ourselves to
finding just a single “social choice” outcome instead of a full ranking is not a solution to
the problem highlighted by Arrow’s Theorem.
Theorem (Muller and Satterthwaite, 1977)

Suppose #A ≥ 3. If a Social Choice Function f has Universal Domain, is Monotonic
and Pareto Efficient then it is Dictatorial.
If #A = 2, then majority voting is a well-defined SCF and satisfies all properties.
22
Comments Essentially, we’d be eliminating Universal Domain. “single-peaked preferences on an or-
dered set” means that we can line up alternatives on a line (such as the left-right spectrum
for politicians), each individual has a “position” on that spectrum, and ranks candidates by
how for away from their position they are. The fact that under majority voting the candi-
There are some ways around these problems. date with that is closest to the position of the “median” voter is being elected is the Median
Voter Theorem. While majority voting may be therefore a “good” SCF in this setting, it is
• In particular, restricting the domain of possible preferences is a way out of usually not the case that people care only about the position on a particular spectrum (e.g.
these impossibility results. consider the substantial amount of people that voted for Melenchon in the first round of
the 2017 presidential elections, and for Le Pen in the second.)
• For example: with single-peaked preferences on an ordered set, majority
voting satisfies IIA and Pareto efficiency
• However, these restrictions on possible preferences have to be justified.
23
Implementability
Even if we can find a good SCF, there is another issue that we ignored:
• in order to get the correct output from the SCF, we need to input the true
preferences of individuals.
• But it is generally the case that these preferences are only known to them
(private information).
• Is it in their best interest to communicate their true preferences? Or would

they sometimes be better off pretending that they have other preferences?
24
Strategic Manipulations Under Plurality Rule, Hannibal Lecter is chosen (because he gets two votes, from 1 and 3,
whereas the other two only get one vote). Mr 2 knows that, and he’s not happy: we would
Ms. 1 Mr. 2 Ms. 3 Mr. 4 Ms. 1 Mr. 2 Ms. 3 Mr. 4 prefer even the Joker over Lecter. He therefore pretends that the Joker was his top choice
(strategic voting), in which case the Joker and Lecter are both top ranked. Hence, strategic
voting is clearly in Mr. 2’s interest (“he prefers to lie about his preferences”).
⇓ Plurality ⇓ Plurality
1 1
2 + 2
25
Mr. 2 prefers to lie
Strategy Proofness and another definition “Onto” is weaker than Pareto Efficiency: PE says that the SCF chooses a whenever a is top
ranked by everyone. “Onto” says that a is being chosen under some preference profile (not
Definition (Strategy Proofness) necessarily the one where everyone ranks a top).
A SCF is strategy proof if every individual prefers to communicate her true
preferences regardless of the preferences of other individuals.
Formally, f is strategy proof if, for every i, every −i (the preferences of other
agents), every i (i’s true preferences) and every ′i (a potential lie), we have:
f(i , −i ) = f(′i , −i ) OR f(i , −i ) i f(′i , −i )
(either lying is giving the same result OR you prefer the result under not lying
over lying)
Definition (Onto)
We say that a SCF is onto if for every alternative a, there is a preference profile
such that f outputs a. 26
Gibbard-Satterthwaite Theorem Eh... we still get only Dictatorial SCF’s. More and more evidence pointing to the idea that
we need to relax UD in order to get more or less satisfying answers.
Theorem (Gibbard-Satterthwaite)
Suppose #A ≥ 3. If a Social Choice Function f has Universal Domain, is
strategy-proof and onto, then it is Dictatorial.
27
Liberalism and Efficiency*
This material (and all where the section title contains an asterisk) is not exam material.
The Paretian Liberal
Question: is Pareto optimality compatible with liberalism?

Liberalism is the idea that some choices should be left to individuals.
For example “whether you should sleep on your back or on your belly is a matter
in which the society should permit you absolute freedom, even if a majority of
the society is nosey enough to feel that you must sleep on your back.”
Majority decision is sometimes criticized on these grounds.
The market does not provide a solution either, since we know that the market
outcome is not Pareto efficient in the presence of externalities.
28
Liberalism
A Social Welfare Function F : P → L is Liberal if: For each individual i, there is at

least one pair of alternatives (a, b) such that if i prefers a to b, then society
prefers a to b as well.
... that is: each individual controls at least one choice in society (for example the
color of one’s house)
Theorem (Amartya Sen, 1970)
Suppose #A ≥ 3. There is no Social Welfare Function that satisfies Universal
Domain, Pareto Efficiency and Liberalism.
The theorem holds if we only assume that at least two individuals in society
control at least one choice each.
29
Proof “Controlled by” here means that x F y if and only if x 1 y, and w F z if and only if w 1 z.
• The choice controlled by Ms. 1: (x, y)
• The choice controlled by Mr. 2: (w, z)
• There is at most one alternative in common between these two pairs!
30
If there is one alternative in common, we can assume it’s x = z. Otherwise, we just relabel
Proof the choices.
• First case: One alternative in common x = z In the second step we assume how the individual preferences look like. Since both agents
prefer y over w, PE implies that under the SWF F, y F w.
• Suppose L satisfies
• x = z 1 y 1 w But because of the assumption of Liberalism and who controls what, we also need to have
x F y and w F z = x. Together, x F y F w F z = x, that’s a contradiction to transitivity.
• y 2 w 2 x = z
• For every i 6= 1, 2 y w.
• Pareto Efficiency ⇒ y F w
• Liberalism: First guy controls (x, y) ⇒ x F y, from PE: y F w. Second guy

controls (w, x = z) ⇒ w F x
• Contradiction
31
Proof
• Second case: No alternative in common.
• Suppose L satisfies
• w 1 x 1 y 1 z
• y 2 z 2 w 2 x
• For every i 6= 1, 2 w i x , y i z
• Liberalism ⇒ x F y , z F w
• Pareto Efficiency ⇒ w F x and y F z
• Hence: w F x F y F z F w!
32
Mr.1 prefers nobody to read the book (it’s obscene after all), but if someone reads it, it’s
Intuition: An Example better if it’s him than someone else.
• The Book: Les Fleurs du Mal, Baudelaire. Mr. 2 would love it if the prude Mr. 1 were to read the erotic poetry, rather than he himself.
• Two individuals: Mr. 1 (the prude) and Mr. 2 (slightly mischievous) But better someone reads it than nobody.
• 3 alternatives
a. Mr. 1 reads the book. Liberalism suggests that each of them can decide for themselves whether or not to read
b. Mr. 2 reads the book. the book. Therefore a liberal SWF would prefer nobody to read the book over Mr. 1 reading
c. Nobody reads the book. the book, and Mr. 2 reading the book over nobody reading the book. Hence, transitivity
• Mr. 1’s preferences: c a b implies that Mr. 2 reading the book is prefered over Mr. 1 reading the book.
• Mr. 2’s preferences: a b c
But that is inconsistent with Pareto efficiency: both agree that it would be better for Mr. 1
reading the book over Mr. 2 reading the book.
Choice {a, c} → liberalism suggests c a.
Choice {b, c} → liberalism suggests b c The fundamental problem arises from the fact that Mr. 2 has preferences that are at odds
Hence b c a... with Mr. 1’s preferences over whether to read the book.
This is not Pareto Efficient since Mr. 1 and Mr. 2 both prefer a to b.
33
Interpretations
• The conflict arises only under certain particular configurations of individual preferences.
Universal Domain is again the problem...
“The ultimate guarantee for individual liberty may rest not on rules for social
choice but on developing individual values that respect each other’s personal
choice.” (Osborne, 1975)
• In a very basic sense liberal values conflict with the Pareto principle. This is deeper than the
well known problem of achieving Pareto optimality in the presence of externalities. What is at
issue is the acceptability of the Pareto principle as an objective in the context of liberal
values, given certain types of externalities.
“If someone takes the Pareto principle seriously, as economists seem to do, then
he has to face problems of consistency in cherishing liberal values, even very
mild ones. [...] If someone does have certain liberal values, then he may have to
eschew his adherence to Pareto optimality.” (Osborne, 1975)
34
Proof of Muller-Satterthwaite
Theorem*
Start with the setup in the first slide. Because of PE, the SWF must choose a.
Proof (Reny, 2000)
Move b up to the second position for the first individual. Because of monotonicity, the SWF must still choose a.
Now switch a and b. If the SWF still chooses a, continue with the second column and repeat the steps from before,
and so on, until at some point, switching a and b makes the SWF change value to b. We call this column n the
L1 L2 · · · Ln−1 Ln Ln+1 · · · LN pivotal guy.
a a ··· a a a ··· a After the SWF has flipped to b when putting b to the top position for the pivotal guy, move the a’s down as shown.
Because of monotonicity, the SWF still takes the value b.
· · · · · ·
· · · · · · Now switch a and b for the pivotal guy. The SWF must take on either a or b. If it is b, then either Ln−1 or an earlier
Social Choice one must have been the pivotal guy (the relative positions of a and b are the same as back then; by monotonicity
· · · · · · a the SWF must take the same value), and that’s a contradiction to Ln being the pivotal guy. So the SWF must take
· · · · · · the value a.
· · · · · · Introduce another alternative c, and move it as shown. Since the relative positions of c and a never change, the
SWF must still point to a.
· · · · · ·
Switch the a’s and b’s for individuals n + 1, ...N. By monotonicity, the SWF must point to a or b. Suppose it’s b.
b b ··· b b b ··· b
If we move all c’s to the top, by monotonicity the SWF must still point to b, but that’s a contradiction to Pareto
Efficiency. Hence it must be a.
By monotonicity: any change of individuals’ preferences that keeps a on top for the pivotal guy must result in
35
the SWF pointing to a. Hence the pivotal guy is a dictator for a.
Proof (Reny, 2000)
· · · · · ·
· · · · · · the value a.
b · · · · ·
· b ··· b b b ··· b
35
Proof (Reny, 2000)
b · · · · ·
· · · · · · the value a.
· · · · · ·
· b ··· b b b ··· b
35
Proof (Reny, 2000)
b a ··· a a a ··· a After the SWF has flipped to b when putting b to the top position for the pivotal guy, move the a’s down as shown.
a · · · · ·
· · · · · · the value a.
· · · · · ·
· b ··· b b b ··· b
35
Proof (Reny, 2000)
b a ··· a a a ··· a After the SWF has flipped to b when putting b to the top position for the pivotal guy, move the a’s down as shown.
a · · · · ·
· · · · · · the value a.
· · · · · ·
· b ··· b b b ··· b
35
Proof (Reny, 2000)
b b ··· a a a ··· a After the SWF has flipped to b when putting b to the top position for the pivotal guy, move the a’s down as shown.
a a · · · ·
· · · · · · the value a.
· · · · · ·
· · ··· b b b ··· b
35
Proof (Reny, 2000)
a a · · · ·
· · · · · · the value a.
· · · · · ·
· · ··· b b b ··· b
35
Proof (Reny, 2000)
a a · · · ·
· · · · · · the value a.
· · · · · ·
· · ··· b b b ··· b
35
Proof (Reny, 2000)
b b ··· b b a ··· a After the SWF has flipped to b when putting b to the top position for the pivotal guy, move the a’s down as shown.
a a a a · · Social Choice
b one must have been the pivotal guy (the relative positions of a and b are the same as back then; by monotonicity
· · · · · · the SWF must take the same value), and that’s a contradiction to Ln being the pivotal guy. So the SWF must take
· · · · · · the value a.
· · · · · · n is pivotal. Introduce another alternative c, and move it as shown. Since the relative positions of c and a never change, the
· · · · · ·
· · ··· · · b ··· b
35
Proof (Reny, 2000)
b b ··· b b · ··· · After the SWF has flipped to b when putting b to the top position for the pivotal guy, move the a’s down as shown.
Social Choice Because of monotonicity, the SWF still takes the value b.
· · · a · ·
· · · · · · b Now switch a and b for the pivotal guy. The SWF must take on either a or b. If it is b, then either Ln−1 or an earlier
one must have been the pivotal guy (the relative positions of a and b are the same as back then; by monotonicity
· · · · · · the value a.
Monotonicity ⇒ No change
· · · · a a
a a ··· a · b ··· b
35
Proof (Reny, 2000)
b b ··· b b · ··· · After the SWF has flipped to b when putting b to the top position for the pivotal guy, move the a’s down as shown.
· · · a · ·
· · · · · · b the SWF must take the same value), and that’s a contradiction to Ln being the pivotal guy. So the SWF must take
· · · · · · the value a.
· · · · a a
a a ··· a · b ··· b
35
Proof (Reny, 2000)
Social Choice and so on, until at some point, switching a and b makes the SWF change value to b. We call this column n the
L1 L2 · · · Ln−1 Ln Ln+1 · · · LN a pivotal guy.
b b ··· b a · ··· · After the SWF has flipped to b when putting b to the top position for the pivotal guy, move the a’s down as shown.
· · · b · ·
Why? Difference to profile
from before is only Ln . one must have been the pivotal guy (the relative positions of a and b are the same as back then; by monotonicity
⇒ social choice must be a
· · · · · · the value a.
or b. But if it was b, then (by
monotonicity) it must have SWF must still point to a.
· · · · a a
been b before as well: a Switch the a’s and b’s for individuals n + 1, ...N. By monotonicity, the SWF must point to a or b. Suppose it’s b.
a a ··· a · b ··· b
contradiction. So, it must be If we move all c’s to the top, by monotonicity the SWF must still point to b, but that’s a contradiction to Pareto
a.
35
Proof (Reny, 2000)
b b ··· b a · ··· · After the SWF has flipped to b when putting b to the top position for the pivotal guy, move the a’s down as shown.
Social Choice Because of monotonicity, the SWF still takes the value b.
· · · b · ·
· · · · · · a Now switch a and b for the pivotal guy. The SWF must take on either a or b. If it is b, then either Ln−1 or an earlier
· · · · · · the value a.
Introduce a new alternative
c SWF must still point to a.
· · · · a a
a a ··· a · b ··· b
35
Proof (Reny, 2000)
· · ··· · a · ··· · After the SWF has flipped to b when putting b to the top position for the pivotal guy, move the a’s down as shown.
· · · c · ·
· · · b · · Now switch a and b for the pivotal guy. The SWF must take on either a or b. If it is b, then either Ln−1 or an earlier
· · · · · · the value a.
c c c · c c Introduce another alternative c, and move it as shown. Since the relative positions of c and a never change, the
b b b · a a
a a ··· a · b ··· b
35
Proof (Reny, 2000)
Social Choice Now switch a and b. If the SWF still chooses a, continue with the second column and repeat the steps from before,
a and so on, until at some point, switching a and b makes the SWF change value to b. We call this column n the
pivotal guy.
L1 L2 · · · Ln−1 Ln Ln+1 · · · LN
After the SWF has flipped to b when putting b to the top position for the pivotal guy, move the a’s down as shown.
· · ··· · a · ··· · The choice is now a or b by Because of monotonicity, the SWF still takes the value b.
· · · c · · monotonicity. But c is Now switch a and b for the pivotal guy. The SWF must take on either a or b. If it is b, then either Ln−1 or an earlier
· · · b · · unanimously preferred to b
the SWF must take the same value), and that’s a contradiction to Ln being the pivotal guy. So the SWF must take
· · · · · · and if b was the social the value a.
· · · · · · choice it would remain so in Introduce another alternative c, and move it as shown. Since the relative positions of c and a never change, the
c c c · c c the profile where c is moved SWF must still point to a.
b b b · b b at the top of every ranking, a Switch the a’s and b’s for individuals n + 1, ...N. By monotonicity, the SWF must point to a or b. Suppose it’s b.
a a ··· a · a ··· a contradiction to Pareto
Efficiency. Hence the choice
can only be a.
35
Proof (Reny, 2000)
· · ··· · a · ··· · Social Choice After the SWF has flipped to b when putting b to the top position for the pivotal guy, move the a’s down as shown.
a Because of monotonicity, the SWF still takes the value b.
· · · c · ·
Any change on this profile
· · · · · · the value a.
that keeps a at the top of Ln
cannot change the social SWF must still point to a.
b b b · b b
choice. Switch the a’s and b’s for individuals n + 1, ...N. By monotonicity, the SWF must point to a or b. Suppose it’s b.
a a ··· a · a ··· a
35
Proof (Reny, 2000)
L1 L2 · · · Ln−1 Ln Ln+1 · · · LN Social Choice pivotal guy.
· · ··· · a · ··· · a After the SWF has flipped to b when putting b to the top position for the pivotal guy, move the a’s down as shown.
· · · c · ·
Any change on this profile one must have been the pivotal guy (the relative positions of a and b are the same as back then; by monotonicity
that keeps a at the top of Ln
· · · · · · the value a.
cannot change the social
choice. SWF must still point to a.
b b b · b b
a a ··· a · a ··· a Hence n is a dictator for a. If we move all c’s to the top, by monotonicity the SWF must still point to b, but that’s a contradiction to Pareto
35
Proof (Reny, 2000)
• Since a was chosen arbitrarily, the argument shows that there is a dictator
for every alternative.
• But then, by definition, it has to be the same dictator.
• And then f(.) is Dictatorial.
36

1 SocialChoice Annotated

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

1 SocialChoice Annotated

Uploaded by

Copyright:

Available Formats

Social Choice and Welfare

• In this lecture, we will study situations like the following:

• Brexit or not? • Kidney exchange

• Fish market • Ad placements on Google

• Stock market • Job placements in

• School choice • Burkini or not?

GEICO Auto Insurance - GEICO could save you over $500

$29 Cheap Auto Insurance - NYC.USAutoInsuranceNow.com Map for auto insurance

• Individual preferences need to be aggregated.

In this course, we will generally take an institution-free approach start from

We need to create a ranking of the best movie villains of all time.

Hannibal Lecter in Silence of the Lambs (1991)

The Joker in The Dark Knight (2008)

Darth Vader in Star Wars (1977)

We will describe a Social Choice Problem as follows:

• A set of alternatives A = {a, b, · · · }.

• Each individual has a (strict) preference ordering over alternatives i

• Complete preferences: all alternatives can be compared by i .

• Transitivity: a i b AND b i c ⇒ a i c... That is, no cycles.

This dependence is described abstractly by a Social Welfare Function:

F : Preference profiles → Rankings of alternatives

Definition (Universal Domain)

Definition (Universal Domain)

Definition (Pareto efficiency or Unanimity)

Jacques Chirac: 19.88% Jean Saint-Josse: 4.23%

• Aussme that everybody voted for their top-ranked candidate. Moreover,

• But these are minimal requirements.

• It satisfies UD because it always produces a well-defined ordering ∗ =i .

• It satisfies PE because if everyone prefers a to b, then so does i.

• Let ri (a) be the rank of a in Li .

• Rank alternatives so that

a B(L) b ⇔ s(a) ≤ s(b)

#A is the number of alternatives to choose from.

A negative result: maybe we can get a positive result if we limit ourselves to

If #A = 2, then majority voting is a well-defined SWF and satisfies all properties.

This dependence is described abstractly by a Social Choice Function:

f : Preference profiles → Alternatives

Theorem (Muller and Satterthwaite, 1977)

If #A = 2, then majority voting is a well-defined SCF and satisfies all properties.

• However, these restrictions on possible preferences have to be justified.

• Is it in their best interest to communicate their true preferences? Or would

f(i , −i ) = f(′i , −i ) OR f(i , −i ) i f(′i , −i )

Question: is Pareto optimality compatible with liberalism?

A Social Welfare Function F : P → L is Liberal if: For each individual i, there is at

• The choice controlled by Ms. 1: (x, y)

• The choice controlled by Mr. 2: (w, z)

• There is at most one alternative in common between these two pairs!

• Liberalism: First guy controls (x, y) ⇒ x F y, from PE: y F w. Second guy

• Second case: No alternative in common.

• Pareto Efficiency ⇒ w F x and y F z

• But then, by definition, it has to be the same dictator.

• And then f(.) is Dictatorial.

You might also like

• Each individual has a (strict) preference ordering over alternatives i

• Complete preferences: all alternatives can be compared by i .

• Transitivity: a i b AND b i c ⇒ a i c... That is, no cycles.

• It satisfies UD because it always produces a well-defined ordering ∗ =i .

a B(L) b ⇔ s(a) ≤ s(b)

f(i , −i ) = f(′i , −i ) OR f(i , −i ) i f(′i , −i )

• Liberalism: First guy controls (x, y) ⇒ x F y, from PE: y F w. Second guy

• Pareto Efficiency ⇒ w F x and y F z