Monotonicity of Social Welfare Optima

Jens Leth Hougaard, Lars Peter Østerdal

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Abstrakt

This paper considers the problem of maximizing social welfare subject to participation constraints. It is shown that for an income allocation method that maximizes a social welfare function there is a monotonic relationship between the incomes allocated to individual agents in a given coalition (with at least three members) and its participation constraint if and only if the aggregate income to that coalition is always maximized. An impossibility result demonstrates that there is no welfare maximizing allocation method in which agents' individual incomes monotonically increase in society's income. Thus, for any such allocation method, there are situations where some agents have incentives to prevent society in becoming richer.
OriginalsprogEngelsk
TidsskriftGames and Economic Behavior
Vol/bind70
Udgave nummer2
Sider (fra-til)392–402
ISSN0899-8256
DOI
StatusUdgivet - nov. 2010
Udgivet eksterntJa

Emneord

  • Income allocation
  • Monotonicity
  • Core
  • Social welfare
  • Cooperative game

Citationsformater