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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.
This function embodies value judgements about interpersonal utility. The social welfare function shows the relative importance of the individuals that comprise society. [citation needed] A utilitarian welfare function (also called a Benthamite welfare function) sums the utility of each individual in order to obtain society's overall welfare ...
Among welfare economists of the utilitarian school it has been the general tendency to take satisfaction (in some cases, pleasure) as the unit of welfare. If the function of welfare economics is to contribute data which will serve the social philosopher or the statesman in the making of welfare judgments, this tendency leads perhaps, to a ...
Individual and social utility can be construed as the value of a utility function and a social welfare function, respectively. When coupled with production or commodity constraints, by some assumptions, these functions can be used to analyze Pareto efficiency , such as illustrated by Edgeworth boxes in contract curves .
The utility functions may represent their chance of recovery – () is the probability of agent to recover by getting doses of the medication. The utilitarian rule then allocates the medication in a way that maximizes the expected number of survivors.
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 ...
Social choice theory is the study of theoretical and practical methods to aggregate or combine individual preferences into a collective social welfare function. The field generally assumes that individuals have preferences, and it follows that they can be modeled using utility functions, by the VNM theorem.
The welfare maximization problem is an optimization problem studied in economics and computer science.Its goal is to partition a set of items among agents with different utility functions, such that the welfare – defined as the sum of the agents' utilities – is as high as possible.