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Social rationality, separability, and equity under uncertainty

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  • FLEURBAEY, Marc

    ()
    (CNRS, Université Paris Descartes, CERSES, France)

  • GAJDOS, Thibault

    ()
    (CNRS, Ecole Polytechnique and CERSES, France)

  • ZUBER, Stéphane

    ()
    (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Economics, Belgium)

Abstract

Harsanyi (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 Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2010037.

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Date of creation: 01 Jul 2010
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Handle: RePEc:cor:louvco:2010037

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Related research

Keywords: risk; inequality; social welfare; ex ante; ex post; fairness; Harsanyi theorem;

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Cited by:
  1. FLEURBAEY, Marc & ZUBER, Stéphane, 2011. "Inequality aversion and separability in social risk evaluation," CORE Discussion Papers 2011023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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