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

Naqvi, Nadeem and Berdellima, Arian (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 > D7 - Analysis of Collective Decision-Making > D71 - Social Choice ; Clubs ; Committees ; Associations

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.unimuenchen. de/21522/ .