Welfare criteria from choice: the sequential solution
Article [Version of Record]
Is part ofCahier de recherche ; #2015-01
Publisher(s)Université de Montréal. Département de sciences économiques.
We study the problem of deriving a complete welfare ordering from a choice function. Under the sequential solution, the best alternative is the alternative chosen from the universal set; the second best is the one chosen when the best alternative is removed; and so on. We show that this is the only completion of Bernheim and Rangel's (2009) welfare relation that satisfies two natural axioms: neutrality, which ensures that the names of the alternatives are welfare-irrelevant; and persistence, which stipulates that every choice function between two welfare-identical choice functions must exhibit the same welfare ordering.