Abstract

From Arrow, Nash and Coase to a non-Coasian worldview (1)

Galina Schwartz
University of California, Berkeley (UC Berkeley)

We will introduce individual and social preferences, formulate and prove a major result from social choice theory, so called Arrow Impossibility Theorem. Then (time permitting), we will discuss some associated results and extensions, such as Condorcet's paradox and Gibbard–Satterthwaite theorem. Next, we will cover the foundations of cooperative (Nash) and non-cooperative (Stahl-Rubinstein) bargaining theory, and relate with Arrow and Coase Theorems. Then, we will discuss Dixit and Olson (2000) paper, which elegantly and convincingly demonstrates the failure of Coase theorem on an example of public goods provision. Lastly, we will speak about ramifications of these results for modeling CPS.