An Advised Indirect-Utility Ranking of Opportunity Sets

Abstract

There is a substantial strand of literature about ranking the subsets of a set of alternatives, usually referred to as opportunity sets. We investigate a model that is dependent on the preference of a grand set of alternatives. In this framework, the indirect-utility criterion ranks the opportunity sets by the following rule: a subset A is weakly preferred to another subset B if and only if A contains at least one preference maximizing element from A∪B. This criterion leads to the indifference of each subset of alternatives to a singleton; symmetry appears at this stage, as the property holds true for any one of the maximizers in A. Conversely, suppose that a ranking of opportunity sets satisfies the property that each opportunity set is indifferent to a singleton contained within it. Then, we prove that such a ranking must use a generalized form of the indirect-utility criterion, where maximization is applied to a selection of the alternatives. Altogether, these results produce a characterization of the advised indirect-utility criterion for ranking opportunity sets.