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Egalitarian-equivalence and the Pareto principle for social preferences

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  • Koichi Tadenuma

Abstract

When we construct social preferences, the Pareto principle is often in conflict with the equity criteria: there exist two allocations x and y such that x Pareto dominates y, but y is an equitable allocation whereas x is not. The efficiency-first principle requires to rank an allocation x higher than y if (i) x Pareto dominates y or (ii) x and y are Pareto-noncomparable and x is equitable whereas y is not. The equity-first principle reverses the order of application of the two criteria. Adopting egalitarian-equivalence as the notion of equity, we examine rationality of the social preference functions based on the efficiency-first or the equity-first principle. The degrees of rationality vary widely depending on which principle is adopted, and depending on the range of egalitarian-reference bundles. We show several impossibility and possibility results as well as a characterization of the social preference function introduced by Pazner and Schmeidler (1978). We also identify the sets of maximal allocations of the social preference relations in an Edgeworth box. The results are contrasted with those in the case where no-envy is the notion of equity.
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Suggested Citation

  • Koichi Tadenuma, 2005. "Egalitarian-equivalence and the Pareto principle for social preferences," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 24(3), pages 455-473, June.
  • Handle: RePEc:spr:sochwe:v:24:y:2005:i:3:p:455-473
    DOI: 10.1007/s00355-003-0310-2
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    Cited by:

    1. Houy, Nicolas & Tadenuma, Koichi, 2009. "Lexicographic compositions of multiple criteria for decision making," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1770-1782, July.
    2. Houy, Nicolas, 2011. "A refinement of prudent choices," Mathematical Social Sciences, Elsevier, vol. 61(3), pages 166-169, May.
    3. Abe, Takaaki & Nakada, Satoshi, 2023. "The in-group egalitarian Owen values," Games and Economic Behavior, Elsevier, vol. 142(C), pages 1-16.
    4. Thomson, William, 2011. "Chapter Twenty-One - Fair Allocation Rules," Handbook of Social Choice and Welfare, in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 2, chapter 21, pages 393-506, Elsevier.
    5. Houy, Nicolas, 2008. "A note on the Suzumura-consistency," Mathematical Social Sciences, Elsevier, vol. 55(1), pages 90-95, January.
    6. Nicolas Houy, 2008. "Prudent choices and rationality," Working Papers hal-00360518, HAL.
    7. Susumu Cato, 2018. "Collective rationality and decisiveness coherence," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 50(2), pages 305-328, February.
    8. Ludovic Renou & Karl H. Schlag, 2009. "From Ordients to Optimization: Substitution Effects without Differentiability," Discussion Papers in Economics 09/6, Division of Economics, School of Business, University of Leicester.
    9. Fleurbaey, Marc, 2007. "Two criteria for social decisions," Journal of Economic Theory, Elsevier, vol. 134(1), pages 421-447, May.
    10. Yukihiro Nishimura, 2008. "Fair Collective Choice Rules: Their Origin And Relationship," Working Paper 1179, Economics Department, Queen's University.
    11. Matsuki, Jun & Tadenuma, Koichi & 蓼沼, 宏一, 2013. "Choice via Grouping Procedures," CCES Discussion Paper Series 52, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    12. Susumu Cato, 2020. "Compatibility of egalitarian equivalence and envy-freeness in a continuum-agent economy," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(1), pages 97-103, April.
    13. Fleurbaey, Marc, 2007. "Two criteria for social decisions," Journal of Economic Theory, Elsevier, vol. 134(1), pages 421-447, May.

    More about this item

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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