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A General Impossibility Theorem on Pareto Efficiency and Bayesian Incentive Compatibility

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  • Kazuya Kikuchi
  • Yukio Koriyama

Abstract

This paper studies a general class of social choice problems in which agents' payoff functions (or types) are privately observable random variables, and monetary transfers are not available. We consider cardinal social choice functions which may respond to agents' preference intensities as well as preference rankings. We show that a social choice function is ex ante Pareto efficient and Bayesian incentive compatible if and only if it is dictatorial. The result holds for arbitrary numbers of agents and alternatives, and under a fairly weak assumption on the joint distribution of types, which allows for arbitrary correlations and asymmetries.

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  • Kazuya Kikuchi & Yukio Koriyama, 2023. "A General Impossibility Theorem on Pareto Efficiency and Bayesian Incentive Compatibility," Papers 2303.05968, arXiv.org, revised Mar 2024.
    • Handle: RePEc:arx:papers:2303.05968
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    References listed on IDEAS

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    1. Schmitz, Patrick W. & Tröger, Thomas, 2012. "The (sub-)optimality of the majority rule," Games and Economic Behavior, Elsevier, vol. 74(2), pages 651-665.
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    5. Kazuya Kikuchi & Yukio Koriyama, 2019. "The Winner-Take-All Dilemma," ISER Discussion Paper 1059r, Institute of Social and Economic Research, Osaka University, revised Dec 2019.
    6. Satterthwaite, Mark Allen, 1975. "Strategy-proofness and Arrow's conditions: Existence and correspondence theorems for voting procedures and social welfare functions," Journal of Economic Theory, Elsevier, vol. 10(2), pages 187-217, April.
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