Monotonicity of social welfare optima
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Monotonicity of social welfare optima. / Hougaard, Jens Leth; Østerdal, Lars Peter Raahave.
I: Games and Economic Behavior, Bind 70, Nr. 2, 2010, s. 392-402.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Monotonicity of social welfare optima
AU - Hougaard, Jens Leth
AU - Østerdal, Lars Peter Raahave
N1 - JEL classification: C71, D60, I10
PY - 2010
Y1 - 2010
N2 - 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.
AB - 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.
KW - Former LIFE faculty
U2 - 10.1016/j.geb.2010.03.004
DO - 10.1016/j.geb.2010.03.004
M3 - Journal article
VL - 70
SP - 392
EP - 402
JO - Games and Economic Behavior
JF - Games and Economic Behavior
SN - 0899-8256
IS - 2
ER -
ID: 21593214