nicholson微观经济理论ch21.pptVIP

Chapter 21 POLITICAL ECONOMICS Social Welfare Criteria Analyzing the choice among feasible allocations of resources is difficult it involves making choices about the utility levels of different individuals in choosing between two allocations (A and B) the problem arises that some individuals prefer A while others prefer B Social Welfare Criteria We can use the Edgeworth box diagram to show the problems involved in establishing social welfare criteria only points on the contract curve are considered as possible candidates for a social optimum along the contract curve, the utilities of the two individuals vary, and these utilities are directly competitive Social Welfare Criteria Social Welfare Criteria If we are willing to assume that utility can be compared among individuals, we can use the contract curve to construct the utility possibility frontier Social Welfare Criteria Equality Criterion Equality Criterion Utilitarian Criterion A similar criterion would be to choose the allocation on the utility possibility frontier so that the sum of Smith’s and Jones’s utilities is the greatest this point would imply a certain allocation of x and y between Smith and Jones The Rawls Criterion This was first posed by philosopher John Rawls Suppose that each individual begins in an initial position in which no one knows what his final position will be individuals are risk averse society will only move away from perfect equality when the worst off person would be better off under inequality than equality The Rawls Criterion Social Welfare Functions A social welfare function may depend on Smith’s and Jones’s utility levels such as social welfare = w(US,UJ) The social problem is to allocate x and y between Smith and Jones as to maximize w Social Welfare Functions Social Welfare Functions Equitable Sharing A father arrives home with an 8-piece pizza and must decide how to share it between his two sons Teen 1 has a utility function of the form Equitable Sharing The least resistance op