Abstract
In a simple model where agents’ monetary payoffs are uncertain, this paper examines the aggregation of subjective expected utility functions which are interpersonally noncomparable. A maximin social welfare criterion is derived from axioms of efficiency, ex post equity, and social rationality, combined with the independence of beliefs and risk preferences in riskless situations (Chambers and Echenique in Games Econ Behav 76:582–595, 2012). The criterion compares allocations by the values of the prospects composed of the statewise minimum payoffs evaluated by the certainty equivalents. Because of this construction, the criterion is egalitarian and risk averse.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
Blume, L.E., Cogley, T., Easley, D.A., Sargent, T.J., Tsyrennikov, V.: A case for incomplete markets. J. Econ. Theory 178, 191–221 (2018)
Brunnermeier, M., Simsek, A., Xiong, W.: A welfare criterion for models with distorted beliefs. Q. J. Econ. 129–4, 1753–1797 (2014)
Chambers, C.P., Echenique, E.: When does aggregation reduce risk aversion? Games Econ. Behav. 76, 582–595 (2012)
Danan, E., Gajdos, T., Hill, B., Tallon, J.-M.: Robust social decisions. Am. Econ. Rev. 106–9, 2407–2425 (2016)
Diamond, P.: Cardinal welfare, individual ethics, and interpersonal comparisons of utility: comment. J. Polit. Econ. 75, 765–766 (1967)
Fleurbaey, M.: Assessing risky social situations. J. Polit. Econ. 118–4, 649–680 (2010)
Fleurbaey, M., Maniquet, F.: A Theory of Fairness and Social Welfare. Econometric Society Monograph. Cambridge University Press, Cambridge (2011)
Fleurbaey, M., Trannoy, A.: The impossibility of a paretian egalitarian. Soc. Choice Welf. 21, 243–264 (2003)
Fleurbaey, M., Voorhoeve, A.: Decide as you would with full information. An argument against ex ante Pareto. In N. Eyal, S.A. Hurst, O.F. Norheim, D. Wikler eds., Inequalities in Health. Concepts, Measures, and Ethics, Oxford University Press, Oxford (2013)
Fleurbaey, M., Zuber, S.: Inequality aversion and separability in social risk evaluation. Econ. Theor. 54, 675–692 (2013)
Fleurbaey, M., Zuber, S.: Fair management of social risk. J. Econ. Theory 169, 666–706 (2017)
Gilboa, I., Samet, D., Schmeidler, D.: Utilitarian aggregation of beliefs and tastes. J. Polit. Econ. 112–4, 932–038 (2005)
Gilboa, I., Samuelson, L., Schmeidler, D.: No betting Pareto dominance. Econometrica 82, 1405–1442 (2014)
Hammond, H.: Ex-ante and ex post welfare optimality under uncertainty. Economica 48, 235–50 (1981)
Harsanyi, J.: Cardinal welfare, individualistic ethics and interpersonal comparisons of utility. J. Polit. Econ. 63, 309–321 (1955)
Hayashi, T., Lombardi, M.: Fair social decision under uncertainty and responsibility for beliefs. Econ. Theor. 67–4, 775–816 (2019)
Miyagishima, K.: Fair criteria for social decisions under uncertainty. J. Math. Econ. 80, 77–87 (2019)
Mongin, P.: Consistent Bayesian aggregation. J. Econ. Theory 66–2, 313–351 (1995)
Mongin, P.: Spurious unanimity and the Pareto Principle. Econ. Philos. 32, 511–532 (2016)
Mongin, P., Pivato, M.: Ranking multidimensional alternatives and uncertain prospects. J. Econ. Theory 157, 146–171 (2015)
Mongin, P., Pivato, M.: Social preference and social welfare under risk and uncertainty. In: Adler, M., Fleurbaey, M. (eds.) Oxford Handbook of Well-Being and Public Policy. University Press, Oxford (2016)
Mongin, P., Pivato, M.: Social preference under twofold uncertainty. Econ. Theor. 70, 633–663 (2020)
Qu, X.: Separate aggregation of beliefs and values under ambiguity. Econ. Theor. 63–2, 503–519 (2017)
Sprumont, Y.: Resource egalitarianism with a dash of efficiency. J. Econ. Theory 147, 1602–1613 (2012)
Author information
Authors and Affiliations
Corresponding author
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
I am especially grateful to Marc Fleurbaey, Shasi Nandeibam, and two anonymous referees and the associate editor for invaluable discussions and suggestions. I am also thankful to Takanori Adachi, Hinako Akashi, Takao Asano, Susumu Cato, Makoto Hanazono, Youichiro Higashi, Daisuke Nakajima, Z. Emel Öztürk, Murcus Pivato, Erik Schokkaert, Yasuhiro Shirata, Takashi Ui, Alex Voorhoeve, Stéphane Zuber, participants at PET2017 (Paris), SSCW2018 (Seoul) and DTW (Okayama) for helpful comments. The financial supports from JSPS KAKENHI (No. 20K01564) and Aoyama Gakuin University are gratefully acknowledged.
Rights and permissions
Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
About this article
Cite this article
Miyagishima, K. Efficiency, equity, and social rationality under uncertainty. Econ Theory 73, 237–255 (2022). https://doi.org/10.1007/s00199-020-01335-4
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00199-020-01335-4