Winner selected if it receives more than 50% of the vote
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Rank Order Voting
Alternatives are ranked, winner is alternative with lowest total rank
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Plurality Voting
Individuals have one vote, alternative with most votes wins
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Independence of Irrelevant Alternatives
Preferences for a set of otpions should not be changed by the inclusion of an irrelevant alternative
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Arrow's Impossibility Theorem
A voting rule that is rational, Pareto optimal and satisfies IIA must be a dictatorship
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Bergson-Samuelson SWF
Individual utilities depend only on individual consumptions
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Fair Allocation Approach
Beginning with some specific moral judgements and examining their economic implications
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Equitable
No individual prefers another's allocation to their own
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Fair Allocation
An allocation that is both equitable and Pareto Efficient
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Externality
A cost or benefit imposed upon someone by actions taken by others
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Production Externality
When the costs faced by a firm are affected by the production of another firm
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Quasilinear Utility
Utility function that is the sum of a function of utility and a linear function of all other goods (the numeraire)
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Pure Public Good
A good that is both non-rivalled in consumption and non-excludable
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Non-Rivalled in Consumption
All individual that consume the good consume the same amount and has no effect on the amount available for others to consume.
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Non-Excludable in Consumption
Once an individual purchases the good, it is impossible to stop other from consuming it. Individuals will refrain from purchasing hoping others will do so instead.
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Reservation Price
The maximum amount an individual is willing to pay for a good
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Single-Peaked Preferences
Preferences with a single ideal choice and outcomes further from this choice are preferred increasingly less
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States of Nature
Possible outcomes of a random event
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Contingent Consumption Plan
Specification of consumption in each state of nature
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Risk Averse
Preferences whereby an individual's expected utility from a gamble is lower than the utility of the expected value of the gamble
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Fair Odds Line
The budget constraint for a fair gamble where the expected net value of the gamble is equal to zero
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Other cards in this set
Card 2
Front
Preferences are not contradictory
Back
Transitive Preferences
Card 3
Front
Preferences that are both complete and transitive
Back
Card 4
Front
Winner selected if it receives more than 50% of the vote
Back
Card 5
Front
Alternatives are ranked, winner is alternative with lowest total rank
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