Athanassoglou, Stergios (2010): Ordinal efficiency under the lens of duality theory.

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Abstract
An allocation's ordinal efficiency deficit (OED) is defined as the greatest ordinal efficiency loss that can result from its application. More precisely, an allocation's OED is the negative of the greatest total amount by which it may be stochastically dominated by another feasible allocation. Thus, an allocation is ordinally efficient if and only if its OED is zero. Using this insight, we set up a linear program whose optimal objective value corresponds to a given allocation's OED. Furthermore, we show that the OED is a piecewiselinear convex function on the set of allocations. We use the optimal dual variables of the linear program to construct a profile of von NeumannMorgenstern (vNM) utilities that is compatible with the underlying ordinal preferences, and which is a subgradient of the OED at the given allocation. When the given allocation is ordinally efficient, our analysis implies that it is exante welfare maximizing at the constructed vNM profile, and we recover the ordinal efficiency theorem due to McLennan (2002)
Item Type:  MPRA Paper 

Original Title:  Ordinal efficiency under the lens of duality theory 
Language:  English 
Keywords:  random assignment; ordinal efficiency; linear programming; duality 
Subjects:  C  Mathematical and Quantitative Methods > C6  Mathematical Methods; Programming Models; Mathematical and Simulation Modeling > C61  Optimization Techniques; Programming Models; Dynamic Analysis D  Microeconomics > D0  General > D01  Microeconomic Behavior: Underlying Principles D  Microeconomics > D6  Welfare Economics > D60  General 
Item ID:  26331 
Depositing User:  Stergios Athanassoglou 
Date Deposited:  03. Nov 2010 08:35 
Last Modified:  15. Feb 2013 19:32 
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URI:  http://mpra.ub.unimuenchen.de/id/eprint/26331 