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A cardinal social welfare function is a function that takes as input numeric representations of individual utilities (also known as cardinal utility), and returns as output a numeric representation of the collective welfare. The underlying assumption is that individuals utilities can be put on a common scale and compared.
In social choice and operations research, the egalitarian rule (also called the max-min rule or the Rawlsian rule) is a rule saying that, among all possible alternatives, society should pick the alternative which maximizes the minimum utility of all individuals in society.
Welfare economics is a field of economics that applies microeconomic techniques to evaluate the overall well-being (welfare) of a society. [1]The principles of welfare economics are often used to inform public economics, which focuses on the ways in which government intervention can improve social welfare.
Social choice studies the behavior of different mathematical procedures (social welfare functions) used to combine individual preferences into a coherent whole. [ 2 ] [ 3 ] [ 4 ] It contrasts with political science in that it is a normative field that studies how a society can make good decisions, whereas political science is a descriptive ...
A utilitarian social welfare function weights the well-being of each individual equally, while a Rawlsian social welfare function only considers the welfare of the least well-off individual. [ 48 ] Neoclassical economic theory provides two conflicting lenses for thinking about the genesis of the common good, two distinct sets of microfoundations.
In a 1938 paper Bergson defined and discussed the notion of an individualistic social welfare function. The paper delineated necessary marginal conditions for economic efficiency, relative to: real-valued ordinal utility functions of individuals (illustrated by indifference-curve maps) for commodities; labor supplied; other resource constraints.
There are two fundamental theorems of welfare economics. The first states that in economic equilibrium , a set of complete markets , with complete information , and in perfect competition , will be Pareto optimal (in the sense that no further exchange would make one person better off without making another worse off).
Welfare economics is a branch of economics that uses microeconomic techniques to evaluate well-being (welfare) at the aggregate (economy-wide) level. A typical methodology begins with the derivation (or assumption) of a social welfare function, which can then be used to rank economically feasible allocations of resources in terms of the social welfare they entail.