Condorcet's Paradox- What can we do about it?

My curiosity prompted me to open the recruiting-related files in the folder when I was interning at a firm this summer. My conclusion after briefly looking at the documents was that it was not easy to choose among a group of well-educated and experienced candidates. Though I do not remember the exact details of the comments on candidates, I did remember seeing some cycling, controversial opinions. Something like, person A prefers Candidate X over Y, and Y over Z (X > Y > Z, person B prefers Candidate Y over Z, and Z over X (Y > Z > X), and person C prefers Candidate Z over X, and X over Y (Z > X > Y). I didn't understand why it took months for them to find the candidate that everyone likes and now it seems this has something to do with Condorcet's paradox.

I also see another slightly different document, that asks the people to rate the candidates from 1-10. So does simply adding a rating scale solve the Condorcet's paradox? Borda Count helps explain it. It is a rank-based voting system where each decision-maker ranks the options, and points are assigned based on their rankings. The candidate with the highest total score wins. For example, if person A ranks X > Y > Z, X gets 3 points, Y gets 2, and Z gets. This process is repeated for each manager, and the points are summed.

Even though Borda Count is not applicable to voting for obvious reasons, it is at least something that we can do to mitigate the effects of Condorcet's paradox.

The Year of Jubilee

Every fifty years, the ancient Israelites would celebrate the Year of Jubilee as outlined in Leviticus 25 in the Bible. This is a year when debts were forgiven, slaves were set free, the poor were cared for, and property was returned to its original owner. Although God gave Israel land as a gift in the Old Testament, he still retained full ownership and control, making their ownership temporary. This tradition symbolized what life with God looks like–how nothing is entirely man’s alone but bestowed by God in the covenantal relationship he made with his people.

This decree can simply be thought of as divinely-bestowed public insurance. As Mueller outlines in Public Choice III, it parallels modern redistribution programs that encourage communal support. In the presence of uncertainty, the Israelites committed to caring for one another by pooling resources at the risk of their future comfort. In a sense, God formed a natural monopoly through shared goods that were under His ultimate control. In uncertainty, any individual can be rational and selfish and still agree to redistribution of goods. For the Israelites, they agreed to this out of a mix of fear and devotion to God, but they still end up being better off because of it. When everyone contributes, each person ends up equally better off without hurting anyone else, meaning they are in a Pareto-efficient allocation.

Scott Stadium's Hill: No Longer a Public Good?

While I’m not a big college football fan, the one non-UVA game I will watch every year is Alabama-Georgia. I have no connection to either team, nor to those schools, though I think what forces me to tune in each season is the spectacle surrounding the game. This past weekend was no different. TV coverage showed hordes of fans outside the stadium hours before kickoff, and the 100k seats in Bryant-Denny were all sold out. Watching those scenes reminded me of our very own Scott Stadium, and the beloved student hill. 

For most of UVA’s student population, it used to be a prime example of a true ‘public good’. Non-excludable (for students) and non-rival (if anything, it gets better with more people there). This season, however, that is no longer true. Staff at Scott Stadium have placed a cap on the number of Students allowed on the hill. Additionally, the only time students can access the hill is at the very start of the game- barring latecomers from accessing it, and preventing students from going freely in-and-out of the hill. As a result, it has ceased to be a public good for university students, but has become something of a club good, with access determined by how early one gets there. Ever since this change, hill attendance has plummeted- especially in the latter quarters, and the energy in Scott Stadium has suffered as a result, prompting widespread backlash from the student body. 

The MicroCAT: Charlottesville's Public Good Provision

Funded by a $1.5 million grant from the Virginia Department of Rail and Public Transportation in 2023, Charlottesville started to provide a new service known as MicroCAT. Essentially, it is a free, on-demand taxi service aimed at increasing the accessibility of public transportation to less-densely populated areas in Albemarle County and residents with disabilities. Residents can book a ride using an app and travel to and from some of the major shopping centers along Route 29 or in the Pantops area. 

The MicroCAT can be categorized as a public good since anyone can access the service for free (non-excludable) and its role as a public transportation option means someone booking a MicroCAT will not significantly impact someone's else ability to order a MicroCAT (non-rival). Charlottesville's decision to provide such a service is also an example of Tiebout's theory of local expenditures in practice. It provides insight into the consumer preferences, especially of low-income residents, for more accessible public transportation. The provision of this public good might have influenced recent movers to settle in Charlottesville despite housing being much cheaper in nearby towns such as Crozet or Waynesboro.

316 Free Riding

 Over the past couple weeks we have talked about free-riding. In this situation an individual benefits from a public good without actually paying for it. One example we talked about in class was a dam used to protect a small town. This is a public good and benefits everyone. If there were 100 people and everyone but one person paid, that person would receive the benefit of the dam without paying.

The past two years I've lived in a house with 17 people. It's a great living situation except for the matter of dishes. Oftentimes there are dishes in the sink left to "soak" and then never washed, dishes under couches, and an always full dishwasher. Everyone puts dirty dishes in the dishwasher but no one likes to unload the dishwasher. If the dishes weren't washed or dishwasher unloaded no one would have dishes to use for meals. This created a free-rider problem because there were two people who actually did the dishes and everyone else benefitted from their hard work.

Golden Balls: The Ultimate Pareto-Inefficiency

Several years ago, there was a game show that aired in the United Kingdom named "Golden Balls". In the final round of the game, the remaining two contestants choose whether to split or steal a large sum of money. If they both split, then they share the money equally; if one person steals and the other splits, then the person who chose to steal keeps everything. As you may expect, if both parties elect to steal, then they both walk away with nothing. 

I first encountered this game before I had ever studied economics and I was curious as to why everyone did not just split every time - both people walk away happy and they still get a large amount of money. Some time later, after I had encountered the concept of the "Prisoner's Dilemma", I realized that for each individual, it is always better, or at least equivalent, to choose to steal. If the other person steals, then no matter what you do, you get no money (and it may even give you utility to also pick steal to spite the person who tried to take advantage of you). If the other person chooses to split, then it is open season for you to choose steal and walk away with all the money. Of course, if both people think this way, then they will both choose to steal and get nothing, even though they could have both benefited if they both split. And thus we arrive at Golden Balls' Prisoner's Dilemma - both parties would obtain drastically more utility if they both split, but it never makes sense to not choose to steal so two rational individuals would feasibly choose to steal and both walk away empty handed.

Making a Move--a Pareto Efficient One

After our class analysis of love in terms of interdependent utility functions, it struck me that another aspect of romantic pursuit can be analyzed using economic methods. The friends to lovers trope is a classic one in the world of rom-coms. From Harry and Sally to Ross and Rachel, this problem has been explored extensively inTV and movies. When two people are friends who both secretly like each other, they are faced with a prisoner's dilemma. Both would be better off if they just told each other they liked each other and found out that their feelings were reciprocated. However, each person’s dominant strategy is to keep quiet about their feelings to avoid the utter embarrassment of finding out that their friend does not feel the same way or to avoid ruining the friendship. Therefore, there is a Pareto-inefficient dominant strategy equilibrium. 

This prisoner's dilemma is what makes these shows so infuriating, yet entertaining to watch. The audience is agonized that the characters are not making the obvious Pareto improvements. Total utility would be much improved if these characters would just break out of this inefficiency and confess their feelings. However, without an enforcement mechanism, we the audience must often wait an entire season for a Pareto-efficient move to be made. 

Warning: using economics to make love-related decisions may not always work out optimally

The Cost of Ballot Box Ignorance

Listening to the Journal podcast on Spotify, I was reminded of our discussion of (un)informed voters last week. The commentators were discussing the difference in support for economic policy initiatives between American voters and economists.

Economists are surely more educated on the effects of economic policy than the average voter. If we assume the political makeup of economists does not differ from that of the general public, we could use the discrepancy between their support as a proxy for voters’ level of awareness. The difference in support of some policies was striking; whereas 100% of economists opposed putting a 20% tariff on all imported goods, nearly half (47%) of voters supported the tariff. The podcast highlighted how voters can oversimplify their decision calculus, liking the idea of supporting American jobs and “making another country pay”. In reality, companies, rather than whole countries, are the ones that face import tariffs, and they then pass these additional input costs onto consumers, raising prices.

If everyone participates in a democratic system, it helps ensure that the candidate that best represents group interests is elected. To best contribute to this public good, however, voters can make sure their decisions are informed, either by educating themselves on the issue at hand, or, if their opportunity cost is too high, remaining ignorant and relying on expert’s guidance.