Abstract
This article argues that there is a natural solution to carry out interpersonal comparisons of utility when the theory of gambles is supplemented with a group operation of joint receipts. If so, three types of people can exist, and the two types having multiplicative representations of joint receipt have, in contrast to most utility theories, absolute scales of utility. This makes possible, at least in principle, meaningful interpersonal comparisons of utility with desirable properties, thus resolving a long standing philosophical problem and having potentially important implications in economics. Two behavioral criteria are given for the three classes of people. At this point the relative class sizes are unknown.
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Acknowledgments
This work was supported in part by National Science Foundation grant SES-0452756 to the University of California, Irvine. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author and do not necessarily reflect the views of the National Science Foundation. The author has benefited considerably from discussions with, and suggestions on earlier versions of this article, by János Aczél, Ken Binmore, Han Bleichrodt (who caught errors in an earlier version concerning constraints in the first Proposition), Jean-Claude Falmagne (who spotted ambiguities), Igor Kopylov, A. A. J. Marley (who, in his usual way, has provided very detailed and useful comments), C. T. Ng (who not only spotted ambiguities but provided Part I of Proposition 2), Drazen Prelec, Donald Saari, Stergios Skaperdas, and PeterWakker (whose detailed suggestions may have increased its accessibility and clarity).
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Open Access This is an open access article distributed under the terms of the Creative Commons Attribution Noncommercial License (https://creativecommons.org/licenses/by-nc/2.0), which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.
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Luce, R.D. Interpersonal comparisons of utility for 2 of 3 types of people. Theory Decis 68, 5–24 (2010). https://doi.org/10.1007/s11238-009-9138-2
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DOI: https://doi.org/10.1007/s11238-009-9138-2