Market arbitrage, social choice and the core
This paper establishes a clear connection between equilibrium theory, game theory and social choice theory by showing that, for a well defined social choice problem, a condition which is necessary and sufficient to solve this problem - limited arbitrage - is the same as the condition which is necessary and sufficient to establish the existence of an equilibrium and the core. The connection is strengthened by establishing that a market allocation, which is in the core, can always be realized as a social allocation, i.e. an allocation which is optimal according to an ordering chosen by a social choice rule. Limited arbitrage characterizes those economies without Condorcet triples, and those for which Arrow's paradox can be resolved on choices of large utility values.
Year of publication: |
1997
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Authors: | Chichilnisky, Graciela |
Published in: |
Social Choice and Welfare. - Springer. - Vol. 14.1997, 2, p. 161-198
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Publisher: |
Springer |
Saved in:
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