Question
Advanced Microeconomic Theory, Geoffrey A. Jehle and Philip J. Reny, can you please help me the explanation of this DIAGRAMMATIC PROOF of Arrow's Theorem? For
Advanced Microeconomic Theory, Geoffrey A. Jehle and Philip J. Reny, can you please help me the explanation of this DIAGRAMMATIC PROOF of Arrow's Theorem?
For the diagrammatic proof we assume that N = 2 so we can work in the plane. To begin, consider an arbitrary point u in Fig. 6.4, and try to imagine the social indifference curve on which it lies. For reference, the utility space has been divided into four regions relative to u, where the regions do not include the dashed lines. First, note that, by WP, all points in region I must be socially preferred to u. Similarly, u must be socially preferred to all points in region III. Our problem, then, is to rank points in II, IV, and the excluded boundaries, relative to u.
4 . II II. III IV Figure 6.4. A diagrammatic proof of Arrow's theoremStep by Step Solution
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