Is Altruism Feasible? Interdependent Preferences Provide the Answer

Is it possible to be altruistic in the face of altruism? With a naive definition of altruism, the answer is no. If an altruistic consumer is defined to be one whose preferences over allocations satisfy an appropriate interdependence condition, then the answer is yes. However, altruism in the face of malice is impossible. One of our findings is that if two consumers are mutually altruistic, exactly one of them should adopt selfish preferences over allocations.

Legal Change: Integrating Selective Litigation, Judicial Preferences, and Precedent

The claim that the common law displays an economic logic is a centerpiece of the positive economic theory of law. A key question in this literature is whether this outcome is due to the conscious efforts of judges, or the result of invisible hand processes. This paper develops a model in which to two effects combine to determine the direction of legal change. The main conclusions are, first, that judicial bias can prevent the law from evolving toward efficiency if the fraction of judges biased against the efficient rule is large enough; and second, that precedent affects the rate of legal change but not its direction.

Characterizing Paretian Preferences

A characterization of a property of binary relations is of type M if it can be stated in terms of ordered M-tuples of alternatives. A characterization of finite type provides an easy test of whether preferences over a large set of alternatives possesses the property characterized. Unfortunately, there is no characterization of finite type for Pareto representability in R..2. A partial result along the same lines is obtained for Pareto representability in R..k, k .. 2.

Bilateral Accidents with Intrinsically Interdependent Costs of Precaution

The standard economic model of bilateral precaution postulates an interdependency between the care taken by injurers and victims that operates through the effects of each on the expected accident loss. This paper considers situations in which each party's precaution affects not only expected accident loss, but also directly affects the other party's cost of taking precaution. Generalizing the economic model of tort law in this way allows for a more complete analysis of when standard tort rules can and cannot induce optimal precaution. When this additional externality is introduced into a model of unilateral harm (where all accident losses are borne by the victim), none of the standard tort liability rules induces socially optimal behavior by both parties. Moreover, under a contributory negligence rule, the only equilibrium is in mixed strategies; this gives rise to the possibility of litigation in equilibrium. A 'tort-like' liability rule that induces socially optimal behavior by both parties is then characterized; this involves a payment by victims to non-negligent injurers whenever an accident occurs. The model is then extended to consider the case of bilateral harm (where both parties suffer accident losses). It is shown that, as long as both parties can sue to recover their accident losses, all negligence-based tort rules lead to socially optimal behavior by both parties.

Marriage Matching with Correlated Preferences

Authors of experimental, empirical, theoretical and computational studies of two-sided matching markets have recognized the importance of correlated preferences. We develop a general method for the study of the effect of correlation of preferences on the outcomes generated by two-sided matching mechanisms. We then illustrate our method by using it to quantify the effect of correlation of preferences on satisfaction with the men-propose Gale-Shapley matching for a simple one-to-one matching problem.

Marriage Matching and Intercorrelation of Preferences

Men's and women's preferences are intercorrelated to the extent that men rank highly those women who rank them highly. Intercorrelation plays an important but overlooked role in determining outcomes of matching mechanisms. We study via simulation the effect of intercorrelated preferences on men's and women's aggregate satisfaction with the outcome of the Gale-Shapley matching mechanism. We conclude with an application of our results to the student admission matching problem.

Finite Characterizations and Paretian Preferences

A characterization of a property of binary relations is of finite type if it is stated in terms of ordered T-tuples of alternatives for some positive integer T. A characterization of finite type can be used to determine in polynomial time whether a binary relation over a finite set has the property characterized. Unfortunately, Pareto representability in R2 has no characterization of finite type (Knoblauch, 2002). This result is generalized below Rl, l larger than 2. The method of proof is applied to other properties of binary relations.

Continuous Paretian Preferences

Two forms of continuity are defined for Pareto representations of preferences. They are designated continuity and coordinate continuity. Characterizations are given of those Pareto representable preferences that are continuously representable and, in dimension two, of those that are coordinate-continuously representable.