Premium
PARETO EFFICIENCY AND WEIGHTED MAJORITY RULES
Author(s) -
Azrieli Yaron,
Kim Semin
Publication year - 2014
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12083
Subject(s) - incentive compatibility , incentive , interim , scoring rule , ex ante , pareto principle , economics , mathematical economics , decision rule , weighted arithmetic mean , pareto efficiency , majority rule , microeconomics , pareto optimal , computer science , econometrics , mathematics , mathematical optimization , multi objective optimization , artificial intelligence , operations management , machine learning , political science , law , macroeconomics
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.