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The computational complexity of rationalizing Pareto optimal choice behavior

Thomas Demuynck

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: We consider a setting where a coalition of individuals chooses one or several alternatives from each set in a collection of choice sets. We examine the computational complexity of Pareto rationalizability. Pareto rationalizability requires that we can endow each individual in the coalition with a preference relation such that the observed choices are Pareto efficient. We differentiate between the situation where the choice function is considered to select all Pareto optimal alternatives from a choice set and the situation where it only contains one or several Pareto optimal alternatives. In the former case we find that Pareto rationalizability is an NP-complete problem. For the latter case we demonstrate that, if we have no additional information on the individual preference relations, then all choice behavior is Pareto rationalizable. However, if we have such additional information, then Pareto rationalizability is again NP-complete. Our results are valid for any coalition of size greater or equal than two.

Date: 2011-06
New Economics Papers: this item is included in nep-gth and nep-net
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Related works:
Journal Article: The computational complexity of rationalizing Pareto optimal choice behavior (2014) Downloads
Working Paper: The computational complexity of rationalizing Pareto optimal choice behavior (2014) Downloads
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