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Aggregation of Utility Functions

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  • E. Eisenberg

    (Hughes Aircraft Company, Malibu, California)

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    Abstract

    We are primarily concerned here with the question of integrability of the total demand in a model in which each consumer acts according to a cardinal utility function and has a fixed monetary income. It is well known that concavity of the various utilities is not sufficient to guarantee integrability, nor even to ensure rationality of the revealed preference. We show that if each personal utility function is homogeneous, in addition to satisfying the usual regularity conditions, then an aggregate utility function can be defined explicitly in terms of the given utilities. Furthermore, under the same assumptions we give a new characterization of equilibrium and show that equilibrium satisfactions are unique.

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    File URL: http://dx.doi.org/10.1287/mnsc.7.4.337
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 7 (1961)
    Issue (Month): 4 (July)
    Pages: 337-350

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    Handle: RePEc:inm:ormnsc:v:7:y:1961:i:4:p:337-350

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    Cited by:
    1. James Moore, 2010. "On aggregation and welfare analysis," Review of Economic Design, Springer, vol. 14(1), pages 95-129, March.
    2. Marcel Aloy & Gilles De Truchis, 2012. "Estimation and Testing for Fractional Cointegration," Working Papers halshs-00793206, HAL.
    3. Shafer, Wayne & Sonnenschein, Hugo, 1975. "Some theorems on the existence of competitive equilibrium," Journal of Economic Theory, Elsevier, vol. 11(1), pages 83-93, August.
    4. Thorsten Hens, . "An Extension of Mantel (1976) to Incomplete Markets," IEW - Working Papers 071, Institute for Empirical Research in Economics - University of Zurich.
    5. Jain, Kamal & Vazirani, Vijay V., 2010. "Eisenberg-Gale markets: Algorithms and game-theoretic properties," Games and Economic Behavior, Elsevier, vol. 70(1), pages 84-106, September.
    6. Cecilia García-Peñalosa & Stephen J. Turnovsky, 2012. "Income Inequality, Mobility, and the Accumulation of Capital. The role of Heterogeneous Labor Productivity," AMSE Working Papers 1216, Aix-Marseille School of Economics, Marseille, France.
    7. J. C. R. Alcantud, 2003. "Stochastic demand correspondences and their aggregation properties," Microeconomics 0309001, EconWPA, revised 08 Jan 2005.
    8. Edward E. Schlee, 2001. "The Value of Information in Efficient Risk-Sharing Arrangements," American Economic Review, American Economic Association, vol. 91(3), pages 509-524, June.
    9. Thorsten Hens & Beate Pilgrim & Janos Mayer, . "Existence of Sunspot Equilibria and Uniqueness of Spot Market Equilibria: The Case of Intrinsically Complete Markets," IEW - Working Papers 188, Institute for Empirical Research in Economics - University of Zurich.
    10. Turnovsky, Stephen J. & Garci­a-Peñalosa, Cecilia, 2008. "Distributional dynamics in a neoclassical growth model: The role of elastic labor supply," Journal of Economic Dynamics and Control, Elsevier, vol. 32(5), pages 1399-1431, May.
    11. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
    12. Lilia Maliar & Serguei Maliar, 2005. "An Analytical Construction Of Constantinides¿ Social Utility Function," Working Papers. Serie AD 2005-25, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    13. José Alcantud, 2006. "Notes and Comments: Stochastic demand correspondences and their aggregation properties," Decisions in Economics and Finance, Springer, vol. 29(1), pages 55-69, 05.
    14. Foders, Federico, 1983. "Industriegüterexport und Faktorproportionenhypothese : Untersuchung am Beispiel der Exportstruktur Argentiniens," Open Access Publications from Kiel Institute for the World Economy 439, Kiel Institute for the World Economy (IfW).
    15. Turnovsky, Stephen J., 2011. "On the role of small models in macrodynamics," Journal of Economic Dynamics and Control, Elsevier, vol. 35(9), pages 1605-1613, September.
    16. Chenghu Ma & Jiankang Zhang, 2013. "p-Weakly constrained Pareto efficiency and aggregation in incomplete markets," Social Choice and Welfare, Springer, vol. 41(3), pages 605-623, September.
    17. Hens, Thorsten & Mayer, Janós & Pilgrim, Beate, 2004. "Existence of Sunspot Equilibria and Uniqueness of Spot Market Equilibria: The Case of Intrinsically Complete Markets," Discussion Papers 2004/15, Department of Business and Management Science, Norwegian School of Economics.
    18. repec:ebl:ecbull:v:4:y:2007:i:13:p:1-7 is not listed on IDEAS

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