ECON 24N Social Choice & Market Design

This is a course for mathematically sophisticated freshmen, addressing how societies can make group choices based on the preferences of individuals and how insights of theory are being employed to organize markets and create new resource allocation systems. It begins by exploring two fundamental conundrums: the logical impossibility of combining the preferences of several people in a coherent way to produce a social choice in a setting with three or more alternatives, and the related impossibility of creating a voting system for that setting that is "strategy-proof," meaning that it is always optimal to vote honestly. Despite these general impossibilities, there are important situations in which coherent and strategy-proof decision making is possible, and these are explored and explained. An exciting new development in economics is the application of these ideas to redesign important resource allocation problems in areas ranging from radio spectrum reallocation to school assignments for children. The first part of the class will lay foundations; the last part will explore design challenges that economists are facing right now.