Problem -
Consider the three alternative allocations of money (m) in an economy composed of three people, with people labeled A, B, C, and alternative allocations labeled X, Y, Z. The values in the 9 cells are the moneys accruing to each person under each alternative allocation
|
Person
|
A
|
B
|
C
|
|
Allocation X
|
5
|
5
|
5
|
|
Allocation Y
|
7
|
5
|
4
|
|
Allocation Z
|
11
|
6
|
0
|
a) Which distribution is preferred by a Rawlsian Social Welfare Function? Assume that utility is defined as u, = m, and recall that Rawlsian Social Welfare function would be equal to the minimum utility experienced by any person under the allocation.
b) Which distribution is preferred by a Utilitarian Social Welfare Function that is defined as ∑(ui), where ui = mi?
c) Which distribution is preferred by a different Utilitarian Social Welfare Function that is defined as ∑(ui), where ui = mi1/2?