A Behavioral Arrow Theorem
11 Pages Posted: 24 May 2012
Date Written: May 23, 2012
In light of research indicating that individual behavior may violate standard assumptions of rationality, we modify the standard model of preference aggregation to study the case in which neither individual nor collective preferences are required to satisfy transitivity or other coherence conditions. We introduce the concept of an ordinal rationality measure which can be used to compare preference relations in terms of their level of coherence. Using this measure, we introduce a monotonicity axiom which requires that the collective preference become more rational when the individual preferences become more rational. We show that for any ordinal rationality measure, it is impossible to find a collective choice rule which satisfies the monotonicity axiom and the other standard assumptions introduced by Arrow (1963): unrestricted domain, weak Pareto, independence of irrelevant alternatives, and nondictatorship.
Keywords: aggregation, axioms, intransitivity, coherence, monotonicity, rationality, arrow's theorem
JEL Classification: D60, D70, D71
Suggested Citation: Suggested Citation