Abstract
We consider the design of decision rules in an environment with two alternatives, independent private values and no monetary transfers. The utilitarian rule subject to incentive compatibility constraints is a weighted majority rule, where agents' weights correspond to expected gains given that their favorite alternative is chosen. It is shown that a rule is interim incentive efficient if and only if it is a weighted majority rule, and we characterize those weighted majority rules that are ex ante incentive efficient. We also discuss efficiency in the class of anonymous mechanisms and the stability of weighted majority rules.
| Original language | English |
|---|---|
| Pages (from-to) | 1067-1088 |
| Number of pages | 22 |
| Journal | International Economic Review |
| Volume | 55 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - 2014 Nov 1 |
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All Science Journal Classification (ASJC) codes
- Economics and Econometrics
Cite this
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Pareto efficiency and weighted majority rules. / Azrieli, Yaron; Kim, Semin.
In: International Economic Review, Vol. 55, No. 4, 01.11.2014, p. 1067-1088.Research output: Contribution to journal › Article
TY - JOUR
T1 - Pareto efficiency and weighted majority rules
AU - Azrieli, Yaron
AU - Kim, Semin
PY - 2014/11/1
Y1 - 2014/11/1
N2 - We consider the design of decision rules in an environment with two alternatives, independent private values and no monetary transfers. The utilitarian rule subject to incentive compatibility constraints is a weighted majority rule, where agents' weights correspond to expected gains given that their favorite alternative is chosen. It is shown that a rule is interim incentive efficient if and only if it is a weighted majority rule, and we characterize those weighted majority rules that are ex ante incentive efficient. We also discuss efficiency in the class of anonymous mechanisms and the stability of weighted majority rules.
AB - We consider the design of decision rules in an environment with two alternatives, independent private values and no monetary transfers. The utilitarian rule subject to incentive compatibility constraints is a weighted majority rule, where agents' weights correspond to expected gains given that their favorite alternative is chosen. It is shown that a rule is interim incentive efficient if and only if it is a weighted majority rule, and we characterize those weighted majority rules that are ex ante incentive efficient. We also discuss efficiency in the class of anonymous mechanisms and the stability of weighted majority rules.
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UR - http://www.scopus.com/inward/citedby.url?scp=84911492643&partnerID=8YFLogxK
U2 - 10.1111/iere.12083
DO - 10.1111/iere.12083
M3 - Article
AN - SCOPUS:84911492643
VL - 55
SP - 1067
EP - 1088
JO - International Economic Review
JF - International Economic Review
SN - 0020-6598
IS - 4
ER -