Kenneth Arrow
December 17th, 2008 by ericMaybe it is time to read “Social Choice and Individual Values” by Kenneth Arrow. It is available as a Cowles Foundation monograph (http://cowles.econ.yale.edu/P/cm/m12-2/index.htm). Let us remind quickly the example we might start with. Imagine you have one cake, three people (A, B and C) and 4 states of the world to divide the cake.
- State 1: A gets nothing, B gets half of the cake, C gets half of the cake,
- State 2: B gets nothing, A gets half of the cake, C gets half of the cake
- State 3: C gets nothing, A gets half of the cake, B gets half of the cake
- State 4: A gets 1/3, B gets 1/3, C gets 1/3
Clearly, A will prefer States 2 and 3, B will prefer 1 and 3, C will prefer 1 and 2. If they vote such that the majority will decide the state, State 4 will never be chosen…
