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Social Cost and Groves Mechanisms
Author(s) -
Campbell Donald E.
Publication year - 2002
Publication title -
economic notes
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.274
H-Index - 19
eISSN - 1468-0300
pISSN - 0391-5026
DOI - 10.1111/1468-0300.00078
Subject(s) - rest (music) , preference , economics , social cost , selection (genetic algorithm) , microeconomics , mechanism (biology) , positive economics , public economics , computer science , epistemology , philosophy , medicine , artificial intelligence , cardiology
When an individual’s reported preference scheme makes a difference to the selection of a policy, that individual’s report imposes a cost on the rest of society because the selected policy would have been different had the individual’s reported preference been different. In a paper in Economic Notes, Giacomo Bonanno argues that the penalty assessed by the pivotal mechanism is not equal to the cost that the individual’s participation imposes on the rest of society. This note argues to the contrary, by presenting what we believe to be the correct definition of social cost. (J.E.L: D62, D71, H41).