Abstract
One income distribution dominates another according to the rank criterion if the income in each position, ordered from lowest to highest, is at least as great in the former distribution as the corresponding income in the latter, with the strict inequality holding at least once. Pareto dominance implies rank dominance, but not conversely. But rank dominance does imply Pareto dominance where agents are expected utility maximizers relative to subjective probability distributions that characterize incomplete information regarding agents' positions in income distributions. This suggests the rank criterion as a way of evaluating income distributions without resorting to interpersonal comparisons of utility.
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References
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I have benefitted from presenting an earlier version of this paper in the seminar series of the Economics Department of Emory University and in the lecture series sponsored by the Economics Institute at the University of Colorado, Boulder. I am grateful to Peter Aranson and three referees for many helpful comments and suggestions.
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Saposnik, R. The distribution of income, incomplete information and the rank and Pareto criteria. Public Choice 59, 195–202 (1988). https://doi.org/10.1007/BF00054454
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DOI: https://doi.org/10.1007/BF00054454