The paper introduces in social choice theory a directional distance function (DDF) that quantifies the level of inefficiency of a given allocation with respect to the utility possibilities frontier. The paper shows that the DDF has a simple geometric interpretation and involves a complete transitive preference relation. If convexity does not hold true, it is shown that the Rawls welfare function is

We consider a class of cooperative network games with transferable utilities in which players interact through a probabilistic network rather than a regular, deterministic network. In this class of wealth-generating situations we consider probabilistic extensions of the Myerson value and the position value. For the subclass of probabilistic network games in multilinear form, we establish characterizations

What are the chances of an ethical individual rising through the ranks of a political party or a corporation in the presence of unethical peers? To answer this question, I consider a four-player two-stage elimination tournament, in which players are partitioned into those who are willing to sabotage other players’ efforts and those who are not. I show that, under certain conditions, the latter are

In this paper, we use the integer programming approach to mechanism design, first introduced by Sethuraman et al. (2003), and then systematized by Vohra (2011), to reformulate issues concerning the simple majority rule. Our main result consists in showing that, when the number of agents is even, a necessary and sufficient condition for the simple majority rule to be an Arrovian social welfare function

In this paper, we analyze the influence of the delegation of downstream firms that produce different quality of products on the profits, consumer surplus and social welfare in a vertically related market. We find that whether it is price or quantity competition, the delegation can enable the downstream firms to grab the profits from their input suppliers. A downstream firm that produces a high-quality

This paper deals with extensions of the family of sequential priority rules and the random arrival rule for bankruptcy problems when withdrawal limits are fixed by an arbitrator. We assume two approaches to limit withdrawals. The first is based on the principle that agents can only obtain at most a fixed part of the endowment each time they qualify for an award, and the second that agents can only

This paper axiomatizes the representations of weighted utility theory with incomplete preferences. These include the general multiple weighted utility representation as well as special cases of multiple utilities or multiple weights only. Some behavioral implications are explored in the context of a portfolio selection problem, which illustrates the potential applicability of such models to a range

We go deeper into the study of the Dominance Plausible Rule (DPR) model of preferences over acts due to Dubois et al. This model corresponds, in the qualitative framework, to Savage’s model. The DPR model relies on two purely ordinal primitives: (1) a preference over consequences and (2) a plausibility relation over sets of states of the world. We characterize several versions of the model defined

We introduce two families of values for TU-games: the recursive and bargaining values. Bargaining values are obtained as the equilibrium payoffs of the symmetric non-cooperative bargaining game proposed by Hart and Mas-Colell (1996). We show that bargaining values have a recursive structure in their definition, and we call this property recursiveness. All efficient, linear, and symmetric values that

High predictability of returns on housing suggests pervasive irrationality on the part of market participants. In this paper, we show that with small transactions costs, returns may remain highly predictable even if the market contains substantial numbers of risk neutral, rational speculators. The reason is that option values associated with the transactions costs substantially delay arbitrage transactions

In this paper, we review some results of the solution of generalized stable sets introduced by Van Deemen (1991) as a variant of stable sets for abstract decision problems. This solution will be investigated and reviewed for the more general case of irreflexive but not necessarily asymmetric or complete dominance relations. It is proven that the fundamental properties of this solution are preserved

We introduce ‘Balanced Voting’, a voting scheme tailored to fundamental societal decisions. It works as follows: Citizens may abstain from voting on a fundamental direction in a first stage. This guarantees the voting right in a second voting stage on the variants of the fundamental direction chosen in the first. All ‘losers’ from the first stage also obtain voting rights in the second stage, while

In this theoretical article, we develop a unified framework that encapsulates: i) — a system of heterogeneous cities, ii) — heterogeneous workers, iii) — the presence of agglomeration economies and congestion forces, and iv) — heterogeneous city composition preferences. We provide a full analytical characterization of the decentralized and centralized economies. Contrary to conventional wisdom, we

In this paper, we introduce a new core concept called the unbinding core by extending the definition of a deviation. In the traditional definition, players deviate if a profitable allocation exists after their deviation, while our new definition requires that all possible allocations are profitable. Therefore, the unbinding core becomes a superset of the traditional core. We examine some properties

This paper contributes to the theory of average rate of change (ARC) measurement. We use an axiomatic approach to generalize the conventional ARC measures (such as the difference quotient and the continuously compounded growth rate) in several directions: to outcome variables with arbitrary connected domains, to not necessarily time-shift invariant dependence on time, to more general (than an interval)

Carine Nourry left us recently on June 7, 2019, after a long fight against breast cancer. She was forty-six. We are missing a wonderful colleague and a great scientist.

Bargaining power of teacher unions over teacher wages has been either reduced or eliminated by several states in U.S. since 2011. This caused public school districts to move away from single salary schedules (fixed compensation regime) and adapt a flexible compensation regime at which teacher wage rises with quality (value added). In this paper, using a fully tractable general equilibrium model of

We study bribing in a sequential team contest with multiple pairwise battles. Allowing for asymmetries in winning prizes and marginal costs of effort, we present the conditions under which (i) a player in a team is offered a bribe by the owner of the other team and (ii) she accepts that bribe. We show that these conditions depend on the ratios of players’ winning prizes and marginal costs of effort:

The bankruptcy problem is to divide a homogeneous divisible good (the “estate”) between claimants, when the sum of the claims exceeds the value of the estate. When the problem is looked at from an ex-ante point of view (i.e. before the size of the estate is revealed), it is possible to formulate a notion of Pareto efficiency that is stronger than when the more common ex-post perspective is taken. Under

Elite-biased democracies are those democracies in which former political incumbents and their allies coordinate to impose part of the autocratic institutional rules in the new political regime. We document that this type of democratic transition is much more prevalent than the emergence of pure (popular) democracies in which the majority decides the new institutional rules. We then develop a theoretical

We consider a class of social cost problems in which one polluter interacts with an arbitrary number of potential victims. Agents are supposed to cooperate and negotiate an optimal pollution level together with monetary transfers. We examine multi-choice cooperative games associated with a social cost problem and an assignment (or mapping) of rights. We introduce a class of mappings of rights that

This contribution1 introduces a sectoral supply functions approach of equilibrium dynamics in the context of a simple model of overlapping generations with heterogenous goods. The class of preferences that is here considered hinges upon an endogenous leisure motive and an elementary savings behaviour, that comes as a simpler alternative to the Diamond tradition in the benchmark contributions about

We provide a utility representation theorem for the revealed preference of an agent choosing in an arbitrary space endowed with a separable partial order. The result can be applied to construct new revealed preference tests for choices over infinite consumption streams and probability distribution spaces, among other cases of interest in economics. As an illustration, we construct revealed preference

In this paper we investigate the effect of local interaction in a simple urban economics model. Agents interact with others if and only if their interaction benefit outweights their travel cost and therefore meet others only within finite geographic windows. We show that two or more cites may co-exist at the equilibrium provided that they are sufficiently distant. For any interaction surplus function

This special issue of Mathematical Social Sciences collects a selection of twelve original papers, covering different topics in growth and macroeconomic theories, and key related normative and positive themes. It gathers some of the major contributors to these research streams like Bob Becker, Jess Benhabib, Jean-Michel Grandmont and Kazuo Nishimura, together with other distinguished scholars, in memory

We study the consumption and portfolio selection problem of a finitely lived agent who derives utility from the stock of durable goods. We show that the agent’s effective relative risk aversion implied by the optimal portfolio tends to decline and approaches zero, as the planning horizon approaches, whereas the agent exhibits constant effective relative risk aversion in the infinite horizon model of

We show that a majoritarian relation is, among all conceivable binary relations, the most representative of the profile of preferences from which it emanates. We define “the most representative” to mean that it minimizes the sum of distances between itself and the preferences in the profile for a given distance function. We identify a necessary and sufficient condition for such a distance to always

This paper presents a bilateral network formation model that explains why some empirical degree distributions exhibit the increasing hazard rate property (IHRP). In my model, a sequentially arriving node forms a link with an existing node through a bilateral agreement. This newborn node prefers a highly linked node; however, the more links an existing node have, the more the marginal return from an

We study the nature (constructive versus non-constructive) and the issue of real-valued representability of social welfare orders, on the set of infinite utility streams, satisfying the anonymity and asymptotic density-one Pareto axioms. We characterize the existence of representable and constructive social welfare orders (fulfilling the aforementioned axioms) in terms of easily verifiable conditions

In this paper I discuss a standard model of life cycle consumption behavior when the discount rate depends on the state of health and health deteriorates with increasing age. I show that this feature allows the introduction of time-consistent discounting at a non-constant rate and to model, in a convenient way, the notion that individuals discount future payoffs at higher rates when the risk of death

A long-standing challenge for welfare economics is to develop welfare criteria that can be applied to allocations with different population levels. Such a criterion is essential to resolve the optimal population problem, i.e., the tradeoff between population size and the welfare of each person alive. A welfare criterion that speaks to this issue inherently requires evaluating the welfare of nonexistent