Problem Set 1

# Problem Set 1 - Leo Spornstarr Todd Sarver Econ 310-2 5...

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Leo Spornstarr Todd Sarver Econ 310-2 5 October 11 Robert Monday at 4 Problem Set 1 1a. This SWFP does not follow the rule of Independence of Irrelevant Alternatives (IIA). When Jesse changes his order so that C and B swap places and Erika does not change her order at all, the social preference of A and B changes, despite the fact that Jesse leaves his ranking of A preferred to B, as he did in his original preference profile. . This is a violation of IIA. 1b. This SWFP does not follow the rule of Pareto Criterion. Both Raphael and James prefer A to B, however the social preference is B preferred to A. According to the Pareto Criterion, since everyone likes A over B, then the social preference should reflect this, but in this case it does not. 1c. This example has a dictator. The social preference always aligns with Sarah no matter what Gillian’s preference profile is. 1d. This example violates the rule of Independence of Irrelevant Alternatives (IIA). We see that both Michael and Howard change their preferences with respect to B. However, with respect to A the preferences of C and D stay the same. However, the social ranking changes as A because less preferred than both C and D. This is a violation of IIA because in both preference profiles the ranking of A with respect to C and D stay the same, however in the social preference it changes. 2a. The constant rule: This rule does not violate the Universal Domain as there is only one social preference that always holds true, therefore consistency and transitivity will always apply.

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## This note was uploaded on 01/03/2012 for the course ECON 310-2 taught by Professor Sarver during the Spring '08 term at Northwestern.

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Problem Set 1 - Leo Spornstarr Todd Sarver Econ 310-2 5...

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