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.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Non-binary choice; Non-binary preferences; Maximization; Pareto optimality
• Subjects: D - Microeconomics > D0 - General > D01 - Microeconomic Behavior: Underlying Principles; D - Microeconomics > D6 - Welfare Economics > D60 - General

References

Arrow, Kenneth, J. What has economics to say about racial discrimination, Journal of Economic Perspectives, 1998; 12; 91-100.

Sen, Amartya, K. Collective choice and social welfare, North Holland: Amsterdam; 1970.

_____________. Maximization and the act of choice, Econometrica, 1997; 65; 745-779.

Naqvi, Nadeem. On Non-binary Personal Preferences in Society, Economic Theory and Racial Discrimination, 2010, MPRA Paper No. 21522, Online at http://mpra.ub.uni-muenchen.de/21522/ .