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Existence of a Pareto optimal social interaction outcome with non-binary preferences

Berdellima, Arian and Naqvi, Nadeem (2011): Existence of a Pareto optimal social interaction outcome with non-binary preferences.

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Abstract

We prove the existence of a Pareto optimal state of a society with non-binary personal preferences. To our knowledge, this is the weakest set of conditions under which the existence of a Pareto optimal state has been proven. In our theory everybody in society engages in maximization as a personal act of volitional choice based on non-binary preferences, as in Sen (1997). The resultant equilibrium belongs to a unanimity-based nonempty social maximal set. Our generalization exposes the fact that such equilibria support discrimination, which is a surprising, though serious, indictment of relying exclusively on the Pareto principle in social evaluation.

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