UCL - Strategies of Collective Decision Making

[ECON2411]

[30h] 5 credits

Teacher(s): François Maniquet

Language: English

Level: Second

Aims
Main themes
Content and teaching methods
Other information (prerequisite, evaluation (assessment methods), course materials recommended readings, ...)

Aims

The objective of this course is to provide students with an introduction to collective choice theory. The key concepts will be drawn from cooperative game theory and the theory of fair allocation, and will include Pareto efficiency, the core, no-envy, egalitarian-equivalence, solidarity and strategy-proofness. In a series of problems, these concepts will be used to derive normatively appealing allocation rules. These problems include fair divi-sion, the allocation of indivisible objects, queuing and school choices. At the end of the course, students are expected o be able to apply the key concepts to new allocation problems, and use them to justify some solutions to these problems.

Main themes

First theme : fair division : is it possible to justify using markets to allocate private goods ? We will study the efficiency, cooperation and fairness justifications to markets. After that, we will review the fairness criticism to markets, based on the fact that competitive allocation rules fail to satisfy monotonicity properties with respect to changes in the environment.
Second theme : fair assignment of indivisible objects : we will see that some justifications to markets fail to hold when there are indivisibilities ; also, we will define alternatives to markets.
Third theme : school choice : we will see that the impossibility to use money to compensate students who are sent to schools they don't like makes the problem harder to solve and prevents one to use markets to allocate school seats. We will discuss the justification to centralised mechanisms and the core justification to some spe-cial algorithms.
Further themes (as a function of the available time) : queuing, housing market, marriage market, bargaining, bankruptcy.

Content and teaching methods

Contents :
Introduction : The four ingredients of collective choice theory: efficiency, co-operation, fairness and strategic manipulation.
Ch 1 : Markets : markets can be justified from a co-operation point of view ; markets can be justified from a fairness point of view ; other institutions can be justified as well.
Ch 2 : Allocation of objects : Markets are not easy to justify ; No-envy is incompatible with the stand-alone upper bound ; Strategic manipulation: second price auctions.
Ch 3 : School choice : Many-to-one matching ; The Boston algorithm ; the New York algorithm ; The top tra-ding cycle.
Ch sq. : Queuing, bargaining, bankruptcy, housing markets, marriage markets.
Method :
There are weekly lectures ; after each lecture, students get a mandatory home assignment for the following week.

Other information (prerequisite, evaluation (assessment methods), course materials recommended readings, ...)

intermediary microeconomics

Written exam and/or a take-home exam where students have to propose and justify solutions to a problem that was not studied during the lectures.
Students receive a short reading list and a detailed contents of the course.