Economics Dictionary of ArgumentsHome
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| Decision rules: Decision rules are guidelines or criteria used to choose among alternatives in decision-making processes. These rules help simplify the selection process by providing a clear framework for evaluating options based on specific conditions or thresholds. Common examples include majority rules, cost-benefit analyses, and if-then rules, all aimed at achieving the most favorable outcome. See also Decisions, Decision theory, Decision-making processes._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Democratic Theory on Decision Rules - Dictionary of Arguments
Parisi I 497 Decision Rules/democratic theory/decision-making processes/democracy/Nitzan/Paroush: Allowing heterogeneous decisional capabilities, Shapley and Grofman (1981, 1984)(1) and Nitzan and Paroush (1982(2), 1984b(3)) find that the optimal decision rule is a weighted majority rule (WMR) rather than a simple majority rule (SMR). By maximization of the likelihood that the team makes the better of the two choices it confronts, they also establish that the optimal weights are proportional to the log of the odds of the individuals’ competencies, that is, the weights, wi, are proportional to log[pi ∕(1-pi)]. Parisi I 498 For instance, in a five-member team there exist seven different efficient potentially optimal rules. These rules include the “almost expert rule,” the “almost majority rule,” and the “tie-breaking chairman rule.” The number of efficient rules increases very rapidly with the team size. For instance, in a team of nine members the number of efficient rules is already 172,958 (see Isbell, 1959)(4). Now the following question is raised: Is there a mathematical relation between the size of the team and the exact number of efficient rules? This simple question is still an open one. The existence of order relations among decision rules is first noted in Nitzan and Paroush (1985(5), p. 35). The existence of such an order means, Parisi I 499 first, that the number of rankings of m efficient rules is significantly smaller than the theoretical number m! of all possible rankings of these rules and, second, that its existence is independent of the team’s competence. Beyond the theoretical interest in studying order among efficient decision rules, the information about the order has useful applications. Since the order relations are independent of the specific competencies of the decision-makers, the knowledge about the order of the rules is important in cases where the competencies are unknown or only partially known. For instance, if for some reason (e.g. excessive costs) the optimal rule cannot be used, then even in the absence of knowledge about the decisional competencies, the team can identify by the known order of the decision rules the second-best rule, the third-best, and so on. Parisi I 501 In the context of Condorcet’s setting, given the individuals’ common objective and diverse information which yields their decisions, the optimal collective decision rule can be identified (…). >Condorcet Jury Theorem. However, in a binary setting and diverse preferences, one can reach these same optimal collective decision rules by their unique axiomatic characterization. In a more general multi-alternative setting, however, the potential success of the axiomatic approach is clouded by the classical Impossibility Theorems of Arrow (1951)(6) and his followers. As is well known, if few reasonable axioms have to be satisfied by the aggregation rule, a social welfare function does not exist. 1. Shapley, L. and B. Grofman (1984). “Optimizing group judgmental accuracy in the presence of interdependence.” Public Choice 43(3): 329-343. 2. Nitzan, S. and J. Paroush (1981). “The characterization of decisive weighted majority rules.” Economics Letters 7(2): 119-123. 3. Nitzan, S. and J. Paroush (1984b). “A general theorem and eight corollaries in search of a correct decision.” Theory and Decision 17(3): 211-220. 4. Isbell, J. R. (1959). “On the enumeration of majority games.” Mathematical Tables and Other Aids of Computation 13(65): 21-28. 5. Nitzan, S. and J. Paroush (1985). Collective Decision Making: An Economic Outlook. Cambridge: Cambridge University Press. 6. Arrow, K. J. (1951). Social Choice and Individual Values (New York: John Wiley & Sons). Shmuel Nitzan and Jacob Paroush. “Collective Decision-making and the Jury Theorems”. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Democratic Theory Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017 |
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> Counter arguments against Democratic Theory
> Counter arguments in relation to Decision Rules
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