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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 ...
Intuitively, unrestricted domain is a common requirement for social choice functions, and is a condition for Arrow's impossibility theorem. With unrestricted domain, the social welfare function accounts for all preferences among all voters to yield a unique and complete ranking of societal choices.
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.
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).
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