Answer to Question #213428 in Microeconomics for Tanya

Question

 "Is there a ideal way aggregating individual preferences into Social preferences". Explain using Arrow impossibility theorem. Also give the various voting options with examples.

Answer 1

There is no ideal way of aggregating individual preferences into social preferences.

According to Arrow's impossibility theorem, there is no method that exists of aggregating individual preferences into social preferences that can concurrently satisfy Arrow’s four minimal conditions, which are Universal admissibility, independence from immaterial options, Monotonicity, and Non-dictatorship.

The various voting alternatives include plurality rule, the Borda count, singular transferable vote, instant runoff, and approval voting. Examples include quadratic voting, majority rule, ranked voting, unanimity rule, run-offs, and voting by grading.