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Aggregate risk and the Pareto principle

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  • Al-Najjar, Nabil I.
  • Pomatto, Luciano

Abstract

In the evaluation of public policies, a crucial distinction is between plans that involve purely idiosyncratic risk and those that generate correlated, or aggregate, risk. While natural, this distinction is not captured by standard utilitarian aggregators.

Suggested Citation

  • Al-Najjar, Nabil I. & Pomatto, Luciano, 2020. "Aggregate risk and the Pareto principle," Journal of Economic Theory, Elsevier, vol. 189(C).
    • Handle: RePEc:eee:jetheo:v:189:y:2020:i:c:s002205312030079x
    DOI: 10.1016/j.jet.2020.105084
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    Cited by:

    1. Feng, Tangren & Ke, Shaowei & McMillan, Andrew, 2022. "Utilitarianism and social discounting with countably many generations," Journal of Mathematical Economics, Elsevier, vol. 98(C).

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    More about this item

    Keywords

    Harsanyi's theorem; Aggregate risk; Preference aggregation;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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