Market arbitrage, social choice and the core

Suppose a "democratic" society must decide between several options, but the members of society do not unanimously agree on the desirability of the different options. Each member has his or her own ranking, and the goal is to transform this set of preference orders into a single preference order for society as a whole. The top-ranked outcomes according to that social order is what one calls a social choice rule. Ideally a social choice rule should have various desirable features, such as being nondictatorial (the social choice rule does not simply select one person's ranking and ignore the others) and monotonic (if one individual promotes an option on his or her ranking, the societal ranking of this option should not go down). In 1972 Kenneth Arrow won the Nobel Prize in economics for his work on social choice theory, in particular his "impossibility theorem." This theorem states that if society consists of at least two people and there are at least three options to rank, then it is impossible to design a social choice rule that simultaneously satisfies a particular set of desirable features including those mentioned above. In spite of this, choices must be made and a variety of social choice rules have been designed for combining individual preferences into a collective agreement, each having certain limitations. But even once we decide on a particular rule, implementing it in the real world can be a challenge. Consider a multipass voting system---for example, the American system of primary elections followed by the general election between winners of the primary. Just this spring the state of Washington overhauled its primary system to require voters to choose one party's ballot before they can vote, rather than putting candidates of all political parties on the same ballot and letting voters pick and choose among them for each office. The fear with the old system was that voters would misrepresent their own desires in the primary election, in hopes of getting a more easily defeated opposition candidate on the general electionballot. On the other hand, independent-minded voters (of which there are many in Washington state) criticize the new system for not allowing them to express their true preferences for each office. Even when members of society do not intentionally misrepresent their own preferences, decision makers in the real world must always work with incomplete information about the state of the world and people's priorities. The goal of implementation theory is to study the extent to which it is possible to implement a desired social choice rule under various assumptions on the preferences and behavior of members of society. In the following paper, Roberto Serrano, of the Economics Department at Brown University, presents a survey of implementation theory and mathematical results obtained using game theory. The theory is illustrated with a number of interesting examples covering everything from voting and public decision making to King Solomon's dilemma. For more on the subject of voting, please note that this issue contains a related paper in the Problems and Techniques section, "Single Transferable Votes with Tax Cuts," by Eivind Stensholt.

In this paper, we provide axiomatic foundations for social choice rules on a domain of convex and comprehensive social choice problems when agents have cardinal utility functions. We translate the axioms of three well known approaches in bargaining theory (Nash 1950; Kalai and Smorodinsky 1975; Kalai 1977) to the domain of social choice problems and provide an impossibility result for each. We then introduce the concept of a reference function which, for each social choice set, selects a point from which relative gains are measured. By restricting the invariance and comparison axioms so that they only apply to sets with the same reference point, we obtain characterizations of social choice rules that are natural analogues of the bargaining theory solutions.

Chapter 1 Impossibility theorems in the arrovian framework

Abelian symmetry groups in social choice

This paper concerns an interdisciplinary approach to coalition formation. We apply the MacBeth software, relational algebra, the RelView tool, graph theory, bargaining theory, social choice theory, and consensus reaching to a model of coalition formation. A feasible government is a pair consisting of a coalition of parties and a policy supported by this coalition. A feasible government is stable if it is not dominated by any other feasible government. Each party evaluates each government with respect to certain criteria. MacBeth helps to quantify the importance of the criteria and the attractiveness and repulsiveness of governments to parties with respect to the given criteria. Feasibility, dominance, and stability are formulated in relation-algebraic terms. The RelView tool is used to compute the dominance relation and the set of all stable governments. In case there is no stable government, i.e., in case the dominance relation is cyclic, we apply graph-theoretical techniques for breaking the cycles. If the solution is not unique, we select the final government by applying bargaining or appropriate social choice rules. We describe how a coalition may form a government by reaching consensus about a policy.Keywordsstable governmentMacBethrelational algebra RelView graph theorybargainingsocial choice ruleconsensus

Impossibility theorems are ubiquitous in social choice theory. By now, the reader has encountered several of these, among them the famous impossibility results by Arrow, Sen, and Gibbard and Satterthwaite. We think that it is high time to study various possibility results. Of course, this has a price: at least one of Arrow ‘s conditions must be weakened and the reader has to ask himself or herself whether in each individual case, the ensuing possibility is worth its price.

The problem ofjustifying democracy arises when a society sees the need for cooperative, collective action. Collective action may be needed to solve coordination problems, public goods problems, Prisoner's Dilemmas, and other structural problems of human interaction or perhaps to realize common ideals of justice in concrete political institutions. Once the need for collective action is established, one must ask how the goals of a cooperative endeavor are to be secured. Cooperation requires that individuals, at least over a specified range of activity, pursue a joint strategy. To assure voluntary compliance in a joint venture, cooperation must be to each person's advantage. However, each person may have an incentive to induce others to cooperate and to defect from the joint strategy in the hope of enjoying the fruits of cooperation without incurring the opportunity costs of compliance. This is the essence of the Prisoner's Dilemma, and considerations of this sort suggest that if collective action is to succeed, policies or strategies formed collectively must be coercively enforceable. Coercion, however, requires justification. Because solving the problem of rational noncompliance requires that collective decisions be coercively enforceable, the rules by which collective decisions are reached require justification. Douglas Rae neatly puts the problem of justification that emerges when political solutions are coercively enforceable as follows: "Once a political community has decided which of its members are to participate directly in the making of collective policy, an important question remains: 'How many of them must agree before a policy is imposed on the community?"" This is essentially the question to which the principle of democratic rule provides an answer: by what process are collective decisions to be made? Answering Rae's question requires a normative framework. We could say that a procedure for making collective decisions is justified if and

This is an advance summary of a forthcoming article in the Oxford Research Encyclopedia of Politics. Please check back later for the full article.Narrowly understood, social choice theory is a specialized branch of applied logic and mathematics that analyzes abstract objects called preference aggregation functions, social welfare functions, and social choice functions. But more broadly, social choice theory identifies, analyzes, and evaluates rules that may be used to make collective decisions. So understood, social choice is a subfield of the social sciences that examines what may be called “voting rules” of various sorts. While social choice theory typically assumes a finite set of alternatives over which voter preferences are unrestricted, the spatial model of social choice assumes that policy alternatives can be represented by points in a space of one or more dimensions, and that voters have preferences that are plausibly shaped by this spatial structure.Social choice theory has considerable relevance for the study of legislative (as well as electoral) institutions. The concepts and tools of social choice theory make possible formal descriptions of legislative institutions such as bicameralism, parliamentary voting procedures, effects of decision rules (e.g., supramajority vs. simple majority rule and executive veto rules), sincere vs. strategic voting by legislators, agenda control, and other parliamentary maneuvers. Spatial models of social choice further enrich this analysis and raise additional questions regarding policy stability and change. Spatial models are used increasingly to guide empirical research on legislative institutions and processes.

Sybil attacks, in which fake or duplicate identities (a.k.a., Sybils) infiltrate an online community, pose a serious threat to such communities, as they might tilt community-wide decisions in their favor. While the extensive research on sybil identification may help keep the fraction of sybils in such communities low, it cannot however ensure their complete eradication. Thus, our goal here is to enhance social choice theory with effective group decision mechanisms for communities with bounded sybil penetration. Inspired by Reality-Aware Social Choice, we use the status quo as the anchor of Sybil Resilience, characterized by Sybil Safety -- the inability of sybils to change the status quo against the will of the genuine agents, and Sybil Liveness -- the ability of the genuine agents to change the status quo against the will of the sybils. We consider the social choice settings of deciding on a single proposal, on multiple proposals, and on updating a parameter. For each, we present social choice rules that are sybil-safe and, under certain conditions, satisfy sybil-liveness.

A single condition, limited arbitrage, is shown to be necessary and sufficient for the existence of a competitive equilibrium and the core in economies with any number of markets, finite or infinite, with or without short sales. This extends earlier results of Chichilnisky for finite economies. This unification of finite and infinite economies is achieved by proving that in Hilbert spaces limited arbitrage is necessary and sufficient for the compactness of the Pareto frontier . Limited arbitrage has also been shown to be necessary and sufficient for a resolution of the social choice paradox.

Previous articleNext article No AccessArrow's Theorem, Indeterminacy, and Multiplicity Reconsidered*Mathias RisseMathias Risse Search for more articles by this author PDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by Ethics Volume 111, Number 4July 2001 Article DOIhttps://doi.org/10.1086/233570 Views: 53Total views on this site Citations: 18Citations are reported from Crossref © 2001 by The University of Chicago. All rights reserved.PDF download Crossref reports the following articles citing this article:Henrik D. Kugelberg Social choice problems with public reason proceduralism, Economics and Philosophy 38, no.11 (Feb 2021): 51–70.https://doi.org/10.1017/S0266267120000498Wesley H. Holliday, Eric Pacuit Axioms for defeat in democratic elections, Journal of Theoretical Politics 33, no.44 (Nov 2021): 475–524.https://doi.org/10.1177/09516298211043236Hannu Nurmi The Incidence of Some Voting Paradoxes Under Domain Restrictions, Group Decision and Negotiation 29, no.66 (Aug 2020): 1107–1120.https://doi.org/10.1007/s10726-020-09697-9Adiel Teixeira de Almeida, Danielle Costa Morais, Hannu Nurmi More Than Two Alternatives, (Oct 2019): 21–30.https://doi.org/10.1007/978-3-030-30955-8_4Eerik Lagerspetz Interpretations, (Jan 2016): 247–340.https://doi.org/10.1007/978-3-319-23261-4_5MARK A. BURGMAN, HELEN M. REGAN, LYNN A. MAGUIRE, MARK COLYVAN, JAMES JUSTUS, TARA G. MARTIN, KRIS ROTHLEY Voting Systems for Environmental Decisions, Conservation Biology 28, no.22 (Jan 2014): 322–332.https://doi.org/10.1111/cobi.12209Rosa Camps, Xavier Mora, Laia Saumell A continuous rating method for preferential voting. The incomplete case, Social Choice and Welfare 40, no.44 (Apr 2012): 1111–1142.https://doi.org/10.1007/s00355-012-0663-5Aki Lehtinen A welfarist critique of social choice theory, Journal of Theoretical Politics 23, no.33 (Jul 2011): 359–381.https://doi.org/10.1177/0951629811411753Mathias Risse On the Philosophy of Group Decision Methods I: The Nonobviousness of Majority Rule, Philosophy Compass 4, no.55 (Sep 2009): 793–802.https://doi.org/10.1111/j.1747-9991.2009.00224.xMathias Risse On the Philosophy of Group Decision Methods II: Alternatives to Majority Rule, Philosophy Compass 4, no.55 (Sep 2009): 803–812.https://doi.org/10.1111/j.1747-9991.2009.00225.xArnold Shepperson An economy of impossibility: a preliminary study for an ordinal approach to research methods in cultural studies, Critical Arts 22, no.22 (Nov 2008): 333–357.https://doi.org/10.1080/02560040802472492Joel Parker Peter Emerson, ed., Designing an All-Inclusive Democracy: Consensual Voting Procedures For Use in Parliaments, Councils and Committees, Public Choice 135, no.3-43-4 (Nov 2007): 493–496.https://doi.org/10.1007/s11127-007-9261-yMathias Risse On the Philosophy of Group Decision Methods I: The Non-Obviousness of Majority Rule, SSRN Electronic Journal (Jan 2008).https://doi.org/10.2139/ssrn.1296638MARC FLEURBAEY SOCIAL CHOICE AND JUST INSTITUTIONS: NEW PERSPECTIVES, Economics and Philosophy 23, no.11 (Mar 2007): 15–43.https://doi.org/10.1017/S0266267107001204Donald G. Saari Which is better: the Condorcet or Borda winner?, Social Choice and Welfare 26, no.11 (Jan 2006): 107–129.https://doi.org/10.1007/s00355-005-0046-2Mathias Risse Why the count de Borda cannot beat the Marquis de Condorcet, Social Choice and Welfare 25, no.11 (Nov 2005): 95–113.https://doi.org/10.1007/s00355-005-0045-3Gerry Mackie Democracy Defended, 20 (Sep 2009).https://doi.org/10.1017/CBO9780511490293 by Donald G. Saari Capturing the “Will of the People” Saari, Ethics 113, no.22 (Jul 2015): 333–349.https://doi.org/10.1086/342857

Computational social choice is a new interdisciplinary research area at the intersection of social choice theory and computer science that studies computational aspects of social choice mechanisms as well as applications of social choice ideas in the design and analysis of computing systems. Research on computational social choice now encompasses a variety of topics, including the algorithmic aspects of voting rules, computational barriers to strategic behaviour, collective decision-making in multi-agent systems, preference elicitation and communication issues in voting, fair division, computational aspects of weighted voting games, collective decision-making in combinatorial domains, logic-based formalisms for social choice problems, belief and judgement aggregation, and social software. The aim of this special issue is to build on the spectacular success of two workshops on computational social choice (COMSOC’06, Amsterdam and COMSOC’08, Liverpool), and provide a forum for reseachers in the area to present their ideas on a variety of topics. This special issue is composed of nine research articles and a short note that span a fairly wide range of issues, including voting, mechanism design, judgment aggregation, and fairness, and a similarly wide range of techniques, such as logic, experiments, and computational complexity. The paper by Agotnes, van der Hoek and Wooldridge defines a new modal logic for representing and reasoning about preference and judgment aggregation. The authors show that their logic can be used to express a variety of concepts and results from the social choice domain, including majority voting, the discursive paradox, Arrow’s theorem and Condorcet’s paradox. Baharad, Goldberger, Koppel and Nitzan propose a maximum likelihood estimation-based approach for aggregating voters’ opinions over several issues. They argue that their method is vastly superior to simple majority voting, and use both analytical and empirical evaluation to support their argument. Balan, Richards and Luke deal with the problem of selecting a sequence of actions when the actions have multiple beneficiaries. Their goal is to select the actions according to a lexicographic fairness criterion. The explore the complexity of this problem for both finite and infinite sequences of actions and present both algorithms and intractability results for this problem. The paper by Caminada and Pigozzi applies argumentation theory to judgment aggregation, and proposes aggregation operators satisfying not only the usual property of collective rationality, but another highly desirable property,

In this paper, we study the metric distortion of deterministic social choice rules that choose a winning candidate from a set of candidates based on voter preferences. Voters and candidates are located in an underlying metric space. A voter has cost equal to her distance to the winning candidate. Ordinal social choice rules only have access to the ordinal preferences of the voters that are assumed to be consistent with the metric distances. Our goal is to design an ordinal social choice rule with minimum distortion, which is the worst-case ratio, over all consistent metrics, between the social cost of the rule and that of the optimal omniscient rule with knowledge of the underlying metric space. The distortion of the best deterministic social choice rule was known to be between $3$ and $5$. It had been conjectured that any rule that only looks at the weighted tournament graph on the candidates cannot have distortion better than $5$. In our paper, we disprove it by presenting a weighted tournament rule with distortion of $4.236$. We design this rule by generalizing the classic notion of uncovered sets, and further show that this class of rules cannot have distortion better than $4.236$. We then propose a new voting rule, via an alternative generalization of uncovered sets. We show that if a candidate satisfying the criterion of this voting rule exists, then choosing such a candidate yields a distortion bound of $3$, matching the lower bound. We present a combinatorial conjecture that implies distortion of $3$, and verify it for small numbers of candidates and voters by computer experiments. Using our framework, we also show that selecting any candidate guarantees distortion of at most $3$ when the weighted tournament graph is cyclically symmetric.

The theory of social choice is concerned with the problem of aggregating the preferences of several persons into a single preference order. The problem has the same structure as that of aggregating the preference orders of a single person with regard to several aspects of alternatives into a single preference order on the set of alternatives. For this reason, the theory of social choice comes logically not under the topic of collective action (as one might suppose) but rather under the topic of multi-objective decisions. This is so because the several participants in a situation defined as a problem of social choice do not really select courses of action among several available ones when they present their preference orders on a set of alternatives. Therefore they are not ‘actors’, as actors are defined in the theory of decision. To be sure, there are situations where voters do choose strategies, that is, choose among different preference orders to present, which may or may not represent their true preferences but which they believe will be more likely to lead to a more desirable aggregated order. These situations can be considered as n-person decision problems, and we will examine them in the context of non-cooperative n-person games (see Chapter 14. At this time, however, we will suppose that each voter acts ‘sincerely’, that is, presents his ‘actual’ preference order. The decision is now up to some agency, which must combine all these submitted preference orders into a ‘social’ preference order.KeywordsSocial ChoicePreference OrderPareto OptimalitySocial Welfare FunctionSimple MajorityThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

If is a set of social alternatives, a social choice rule (SCR) assigns a subset of A to each potential profile of individuals' preferences over A, where the subset is interpreted as the set of 'welfare optima.' A game form (or 'mechanism') implements the social choice rule if, for any potential profile of preferences, (1) any welfare optimum can arise as a Nash equilibrium of the game form (implying, in particular, that a Nash equilibrium exists) and, (2) all Nash equilibria are welfare optimal. The main result of this paper establishes that any SCR that satisfies two properties - monotonicity and no veto power--can be implemented by a game form if there are three or more individuals. The proof is constructive.