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Instructors: Prof. Dr. Salvatore Barbaro
Event type:
online: Practice class
Displayed in timetable as:
Ü Social Choice
Hours per week:
1
Language of instruction:
Englisch
Min. | Max. participants:
- | -
Requirements / organisational issues:
Introductory Microeconomics
Contents:
Property rights are often seen as a means to achieve optimality. Ill-defined property rights can be the source of externality. An economy with perfect property rights induces the incentives for the individuals to produce and trade
efficiently. A common feature of this approach is that it does not explicitly focus on the resource costs
of the creation of property rights and the motivation of the law enforcement agency. This
assumption has therefore been labeled "outside enforcement approach".
The lecture deals with an economy with endogenous enforced property rights, that allows comparing an anarchical economy with the model of an economy with perfect enforceable property rights. An important insight is, that there is no economy without institutions (New Institutional Economics).
We will see that every rule (like property rights) is a collective decision. But how are collective decisions made? The lecture introduces the Social Choice theory and deals with the famous and pathbreaking Arrow impossibility theorem. On important insight from this theorem is, that there is no collective decision without (political) power playing a crucial role.
Thus, in a third step, we have to follow up with the theory of justice and the role of efficiency and justice in achieving collective decisions in a democracy.
Recommended reading list:
- Anbarci, N., Skaperdas, S., Syropoulos, C., 2002. Comparing bargaining solutions in the shadow of conflict: How norms against threats can have real effects. Journal of Economic Theory 106, 1-16.
- Atkinson, A. B., 1987. On the measurement of poverty. Econometrica 55, 749-764.
- Breyer, F., Kolmar, M., 2014. Grundlagen der Wirtschaftspolitik, 4th Edition. Neue ökonomische Grundrisse. Mohr Siebeck, Tubingen.
- Bös, D., Kolmar, M., 2003. Anarchy, efficiency, and redistribution. Journal of Public Economics 87, 2431-2457.
- Grossman, H., 2001. The creation of effective property rights. American Economic Review 82, 347-352.
- MasColell, A., Whinston, M. D., Green, J. R., 1995. Microeconomic Theory. Oxford University Press, New York, Oxford.
- Sen, A., 2017. Collective Choice and Social Welfare. Penguin Books.
- Sen, A., 1995. Rationality and social choice. American Economic Review 85 (1), 1-24.
- Sen, A., 2009. The Idea of Justice. Allen Lane, London.
- Sen, A., 2014. Arrow and the impossibility theorem. In: Maskin, E., Sen, A.(Eds.), The Arrow Impossibility Theorem. Columbia University Press, pp. 29 - 42.
- Williamson, O. E., 2000. The new institutional economics: Taking stock, looking ahead. Journal of Economic Literature 38 (3), 595{613.
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