Welfare Maximization Entices Participation

TL;DR

This paper demonstrates that welfare-maximizing randomized mechanisms with optional participation inherently encourage participation, and characterizes voting rules satisfying Condorcet-consistency and participation, contrasting with deterministic rules.

Contribution

It establishes a fundamental link between welfare maximization and participation incentives in randomized mechanisms, extending to voting rules with new characterizations.

Findings

Welfare-maximizing mechanisms always entice participation.

The converse holds under additional assumptions.

A randomized voting rule satisfying Condorcet-consistency also entices participation.

Abstract

We consider randomized mechanisms with optional participation. Preferences over lotteries are modeled using skew-symmetric bilinear (SSB) utility functions, a generalization of classic von Neumann-Morgenstern utility functions. We show that every welfare-maximizing mechanism entices participation and that the converse holds under additional assumptions. Two important corollaries of our results are characterizations of an attractive randomized voting rule that satisfies Condorcet-consistency and entices participation. This stands in contrast to a well-known result by Moulin (1988), who proves that no deterministic voting rule can satisfy both properties simultaneously.