Arrow's theorem for economic environments and effective social preferences (Q1124503): Difference between revisions

The paper at hand further elaborates one of the evergreens of social choice theory: Arrow's impossibility theorem. After providing a brief critical survey of assumptions made so far when extending this theorem to the realm of private goods the term ``effective social preferences'' is introduced. It is argued that effectiveness is much weaker than continuity as only the existence of at least one socially most preferred allocation is required within every nonempty compact set of alternative allocations of private goods. In the ensuing three theorems it is maintained that the exclusion of the zero vector from each individuals share of the social ``commodity cake'' can be forgone if effectiveness and a denumerable society are assumed. Thus, the problem of dictatorship with respect to the allocation of private goods is not necessarily just one of ``nonzero allocations'', a result that, according to the author, calls for further research into a rigorous economic theory of the tradeoffs between equity and efficiency.