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1. For each of the following social choice methods, which of Arrow's axioms (A1-6) are violated, and why: a. the Pareto criterion b. plurality-rule voting (of several choices, the one with the most votes wins) c. majority-rule voting

1. For each of the following social choice methods, which of Arrow's axioms (A1-6) are violated, and why: a. the Pareto criterion b. plurality-rule voting (of several choices, the one with the most votes wins) c. majority-rule voting

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1. For each of the following social choice methods, which of Arrow’s axioms (A1-6) are violated, and why: a. the Pareto criterion b. plurality-rule voting (of several choices, the one with the most votes wins) c. majority-rule voting 3. Assume a city of 1,000,000 people, 60% of whom are willing to pay $1 maximum (each) to clean up pollution. The rest of the population is wealthier and is willing to pay $100 each to clean up pollution. Pollution clean-up costs $2,000,000. It has been proposed that each person be taxed equally to pay for the pollution clean-up. Will that pass a majority-rule vote? Is it desirable from the point of view of the Pareto criterion? Is it a good idea, using the compensation principle? Which social choice mechanism do you think is best on intuitive grounds, and why?
Transcribed Image Text:1. For each of the following social choice methods, which of Arrow’s axioms (A1-6) are violated, and why: a. the Pareto criterion b. plurality-rule voting (of several choices, the one with the most votes wins) c. majority-rule voting 3. Assume a city of 1,000,000 people, 60% of whom are willing to pay $1 maximum (each) to clean up pollution. The rest of the population is wealthier and is willing to pay $100 each to clean up pollution. Pollution clean-up costs $2,000,000. It has been proposed that each person be taxed equally to pay for the pollution clean-up. Will that pass a majority-rule vote? Is it desirable from the point of view of the Pareto criterion? Is it a good idea, using the compensation principle? Which social choice mechanism do you think is best on intuitive grounds, and why?
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