An Extension of Optimality Criteria: An Axiomatic Approach to Institutional Choice

Abstract

An argument by Buchanan that the criterion of Pareto optimality is of little value when used solely with traditional economic variables is expanded and developed formally in an axiomatic framework of individual choice. Individual decisions are first aggregated to group decisions, and then group decisions are aggregated to give social decisions. Social decisions are compared with the Pareto-optimal conditions for social choice. Finally, there is a short discussion of the implications for the study of social choice and institutional change.