Social rationality, separability, and equity under uncertainty
AbstractHarsanyi (1955) proved that, in the context of uncertainty, social ratio- nality and the Pareto principle impose severe constraints on the degree of priority for the worst-off that can be adopted in the social evaluation. Since then, the literature has hesitated between an ex ante approach that relaxes rationality (Diamond (1967)) and an ex post approach that fails the Pareto principle (Hammond (1983), Broome (1991)). The Hammond-Broome ex post approach conveniently retains the separable form of utilitarianism but does not make it explicit how to give priority to the worst-off, and how much disre- spect of individual preferences this implies. Fleurbaey (2008) studies how to incorporate a priority for the worst-off in an explicit formulation, but leaves aside the issue of ex ante equity in lotteries, retaining a restrictive form of consequentialism. We extend the analysis to a framework allowing for ex ante equity considerations to play a role in the ex post approach, and find a richer configuration of possible criteria. But the general outlook of the Harsanyian dilemma is confirmed in this more general setting.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2010037.
Date of creation: 01 Jul 2010
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risk; inequality; social welfare; ex ante; ex post; fairness; Harsanyi theorem;
Find related papers by JEL classification:
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- 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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