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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.
An additive agent has a utility function that is an additive set function: for every additive agent i and item j, there is a value ,, such that () =, for every set Z of items. When all agents are additive, welfare maximization can be done by a simple polynomial-time algorithm: give each item j to an agent for whom v i , j {\displaystyle v_{i,j ...
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 ...
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.
Labor theory of value – Labour economics – Labor union – Laffer curve – Laissez-faire – Land (economics) – Land value tax – Law and economics – Legal origins theory – Lerman ratio – Limit price – List of unsolved problems in economics – List of topics in industrial organization – Lemon market – Living wage – Local ...
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.
The Pigou–Dalton principle (PDP) is a principle in welfare economics, particularly in cardinal welfarism. Named after Arthur Cecil Pigou and Hugh Dalton, it is a condition on social welfare functions. It says that, all other things being equal, a social welfare function should prefer allocations that are more equitable. In other words, a ...
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).