Kotaro Suzumura

Strategic Information Revelation

We analyze the problem in which agents have non-public information and are to play an asymmetric information game. The agents may reveal some or all of their information to other agents prior to playing this game. Revelation is via exogenously specified certifiable statements. The equilibria resulting from various revelation strategies are used to determine equilibrium revelation of information. Sufficient conditions are provided for complete revelation of all private information. A number of examples are provided illustrating when revelation will or will not occur in commonly analyzed games.

Individual Rights Revisited

Since Sens contribution on the impossibility of a Paretian liberal, his formulation of libertarian rights has been under debate. In this paper, we highlight some important strands in this debate, and achieve some conceptual clarification of the different and often incompatible views of individual rights. We demonstrate in terms of a counter-example and general reasoning that Sens concept can, more often than not, be inconsistent with our intuitive view of rights and fails to capture important categories of rights. An alternative formulation in terms of game form is introduced, and its relative merit vis-a-vis Sens formulation is discussed.

Remarks on the Theory of Collective Choice

Ever since the so-called paradox of voting was generalized by Arrow (1963) to every democratic method of collective decision-making, a vast literature has appeared (a) trying to circumvent Arrows difficulty by weakening some of his conditions (Bordes, 1976; Hansson, 1973; Plott, 1973; Sen, 1969); (b) proposing some other paradoxes in the theory of collective choice (Batra and Pattanaik, 1972; Hansson, 1969; Schwartz, 1970; Sen, 1970a) and (c) casting doubts about the relevance of Arrows theorem to the theory of Paretian welfare economics (Bergson, 1966; Little, 1952; Samuelson, 1967, 1977). The purpose of this paper is to make some remarks on these recent developments in the theory of collective choice. The first part of the paper deals with the question of how much one needs to weaken Arrows collective rationality condition in order to avoid his impossibility result. As is well known, Arrow (1963) imposed the collective rationality condition that the society can arrange all conceivable alternatives in order of preference and that, if some available set of alternatives is specified, the society must choose therefrom the best alternative with respect to that preference ordering. We will consider two conditions of consistent choice which are weaker than that of Arrow. The first condition requires that, if an alternative x is chosen over another alternative y in binary choice, y should never be chosen from any set of alternatives that contain x; while the second condition requires that, if x is chosen over y in binary choice, there exists no choice situation in which y is chosen and x is available but rejected. (In the second case y can be chosen if x is also chosen, while in the first case y cannot be chosen anyway.) There seems to be a gulf that separates possibility from impossibility in between these two seemingly similar consistency conditions. It will be shown that the first consistency requirement is incomnpatible with essentially Arrovian conditions on the collective choice rule, while the second consistency condition is compatible with the same conditions. Although the difference between these consistency requirements is very subtle, the implication thereof in the context of impossibility result is therefore dramatically different. Lest we should be too satisfied, we must hasten to add that no collective choice rule satisfying our second consistency requirement can be free from the paradox of Paretian liberal (Sen, 1970a; Batra and Pattanaik, 1972). The Arrow-Sen theory is then contrasted with the Bergson-Samuelson one. In view of doing this, it is convenient to remember that Arrows incompatible conditions on collective choice rule can be classified into two categories. The first category consists of statements that apply to any fixed profile of individual preference relations, while the second category refers to the responsiveness of the collective choice to the variations in profiles. (The first category embraces the condition of collective rationality and the Pareto rule, while the second category consists of the independence of irrelevant alternatives

Ordering infinite utility streams

We reconsider the problem of ordering infinite utility streams. As has been established in earlier contributions, if no representability condition is imposed, there exist strongly Paretian and finitely anonymous orderings of intertemporal utility streams. We examine the possibility of adding suitably formulated versions of classical equity conditions. First, we provide a characterization of all ordering extensions of the generalized Lorenz criterion as the only strongly Paretian and finitely anonymous rankings satisfying the strict transfer principle. Second, we offer a characterization of an infinite-horizon extension of leximin obtained by adding an equity-preference axiom to strong Pareto and finite anonymity.

Choice, welfare, and development : a Festschrift in honour of Amartya K. Sen

Professor Amartya Sen has been a distinguished and influential scholar in development economics for over twenty years, and this edited volume seeks to reflect his interests, and the inspiration he has provided for others. The editors have succeeded in creating a coherent and stimulating set of papers from well-known contributors. The volume deals with the enduring themes of Amartya Sens work, ranging through theoretical issues of development economics to the philosophical foundation of welfare systems, and ethics in society. Contributors: Kenneth Arrow, A. B. Atkinson, Pranab Bardhan, J. L. Coles, Rajat Deb, Jean Dreze, Louis Gevers, Peter Hammond, Ravi Kanbur, Eric Maskin, Robert Nozick, Siddiq Osmani, Martin Ravallion, Kevin Roberts, Robert Solow, S. Wibaut

Symmetric Cournot Oligopoly and Economic Welfare: A Synthesis

SummaryRecently, Mankiw-Whinston (1986) and Suzumura-Kiyono (1987) have shown that socially excessive firm entry occurs in unregulated oligopoly. This paper extends this “excess entry” results by looking into strategic aspects of costreducing R&D investment that creates incentives towards socially excessive investments. In the first stage, firms decide whether or not to enter the market. In the second stage, firms make a commitment to cost-reducing R&D investment. In the third stage, firms compete in output quantities. It is shown that the excess entry holds even in the presence of strategic commitments.

Oligopolistic competition and economic welfare: A general equilibrium analysis of entry regulation and tax-subsidy schemes

Abstract Two contributions to the general equilibrium analysis of an oligopolistic economy with free entry are intended. First, we generalize the excess entry theorem to the effect that a marginal decrease in the number of oligopolistic firms from the free entry equilibrium level improves economic welfare. Second, we explore the Pareto-improving tax-subsidy schemes in an oligopolistic economy. Several self-financing and Pareto-improving tax-subsidy schemes will be identified. In contrast with the preceding analysis by Atkinson and Stiglitz, which focused on the ‘long-run’ incidence of corporate taxation, we analyse the ‘short-run’ as well as ‘long-run’ welfare implications of various policies under generalized conditions.

Characterizations of Consequentialism and Nonconsequentialism

By allowing for the possibility that individuals recognize the intrinsic value of choice along with the instrumental value thereof, we suppose that individuals express extended preference orderings of the following type: Choosing an alternative x from an opportunity set A is better than choosing an alternative y from an opportunity set B. Within this framework, we identify a consequentialist and a non-consequentialist, who show contrasting attitudes toward alternatives vis-a-vis opportunities. This paper characterizes these attitudes in terms of some axioms, whereas the companion paper explores the implications of these concepts in the context of social choice theory a la Arrow.

Continuity and egalitarianism in the evaluation of infinite utility streams

There exists a utilitarian tradition à la Sidgwick of treating equal generations equally. Diamond showed that there exists no social evaluation ordering over infinite utility streams in the presence of the Pareto principle, the Sidgwick principle, and continuity. Instead of requiring the Sidgwick principle of procedural fairness, we focus on two principles of distributional egalitarianism along the line of the Pigou–Dalton transfer principle and the Lorenz domination principle, and show that there exists no social evaluation relation satisfying one of these egalitarian principles and the weakened continuity and rationality axioms even in the absence of the Pareto principle.

Rationalizability of choice functions on general domains without full transitivity

The rationalizability of a choice function by means of a transitive relation has been analyzed thoroughly in the literature. However, not much seems to be known when transitivity is weakened to quasi-transitivity or acyclicity. Such weakenings are particularly relevant in the context of social choice. We describe the logical relationships between the different notions of rationalizability involving, for example, the transitivity, quasi-transitivity, or acyclicity of the rationalizing relation. Furthermore, we discuss sufficient conditions and necessary conditions for rational choice on arbitrary domains. Transitive, quasi-transitive, and acyclical rationalizability are fully characterized for domains that contain all singletons and all two-element subsets of the universal set.