Choice, Preferences, and Procedures

A Rational Choice Theoretic Approach

Kotaro Suzumura

• Publisher: Harvard University Press
• Year: 2016
• ISBN:
  9780674727441
• Topic: Economia
• Subtopic: Teoria economica

Kotaro Suzumura is one of the world's foremost thinkers in social choice theory and welfare economics. Bringing together essays that have become classics in the field, Choice, Preferences, and Procedures examines foundational issues of normative economics and collective decision making.Social choice theory seeks to critically assess and rationally design economic mechanisms for improving human life. An important part of Suzumura's contribution over the past forty years has entailed fusion of abstract microeconomic ideas with an understanding of real-world economies in a coherent analysis. This volume of selected essays reveals the evolution of Suzumura's thinking over his career. Groundbreaking papers explore the nature of individual and social choice and the idea of assigning value to freedom of choice, different forms of rationality, and concepts of individual rights, equity, and fairness.Suzumura elucidates his innovative approach for recognizing interpersonal comparisons in the vein of Adam Smith's notion of sympathy and expounds the effect of paying due attention to nonconsequential features, such as the opportunity to choose and the procedure for decision making, along with the standard consequential features. Analyzing the role of economic competition, Suzumura points out how restricting competition may, in some circumstances, improve social welfare. This is not to recommend government regulation rather than market competition but to emphasize the importance of procedural features in a competitive context. He concludes with illuminating essays on the history of economic thought, focusing on the ideas of Vilfredo Pareto, Arthur Pigou, John Hicks, and Paul Samuelson.

PART I

RATIONAL CHOICE AS RATIONALIZABLE CHOICE

Introduction to Part I

Man is a gaming animal. He must be always trying to get the better in something or other.

—CHARLES LAMB, “Mrs. Battle’s Opinions on Whist,” Essays of Elia, 1823

We do what we can, and then make a theory to prove our performance the best.

—EMERSON, Journals, 1834

There’s nothing people can’t contrive to praise or condemn and find justification for doing so.

—MOLIÉRE, The Misanthrope, 1666 (English translation by John Wood)

One of the most widely invoked concepts in economics is that of rationality of the act of choice. It is also one of the basic concepts that is frequently criticized for the wrong reasons. Since this volume hinges squarely on the rationality of individual as well as collective acts of choice, we would like to make at the outset the sense of a rational act of choice as unambiguous as possible.

An agent in charge of making choices is said to be acting rationally if he or she chooses an alternative within each specified opportunity set of alternatives that brings him/her to the “optimal” position with reference to an underlying objective.¹ This definition, according to which the rational choice is identified with the purposive choice, will be sustained throughout this work. On reflection, this notion of rationality is deeply rooted in the evolution of economic theory.²

To bring this concept of the rational act of choice into clear relief, let X and

stand, respectively, for the universal set of alternatives and the family of opportunity sets, each set S ∈

being a nonempty subset of X. C denotes the choice function defined on the family

such that, for each S ∈

, C(S) is a nonempty subset of S. The intended interpretation is that C(S) stands for the set of alternatives that are chosen from the opportunity set S ∈

. We say that the choice function is rational if and only if there exists an underlying purpose in the form of a binary relation R on X such that, for all x, y ∈ X, xRy means that x is at least as good as y, and that C(S) consists of x* ∈ S that optimizes R over S in the sense of R-greatestness for all S ∈

. If this is the case, the underlying purpose R ⊆ X × X is said to be a rationalization of C.

At this juncture of our discourse, consider the following two statements, which are often invoked when one criticizes the rationality of the act of choice.

(A) Rationality of the act of choice is a narrowly circumscribed view in the sense that it construes human acts only through the optimization of selfish interest.

(B) A rational agent is one whose act of choice is motivated by a preference ordering, viz., a preference relation R that satisfies completeness (viz., for all x, y ∈ X, xRy or yRx holds) and transitivity (viz., for all x, y, z ∈ X, if xRy and yRz hold, xRz must also hold).

We contend that the concept of a rational act in ...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Preface
• Original Sources
• Introduction
• Part I. Rational Choice as Rationalizable Choice
• Part II. Social Choice and Welfare Economics
• Part III. Equity, Efficiency, and Intergenerational Justice
• Part IV. Individual Rights and Social Welfare
• Part V. Consequentialism Versus Nonconsequentialism
• Part VI. Competition, Cooperation, and Economic Welfare
• Part VII. Historically Speaking
• Index