Fairness under Uncertainty
AbstractEver since its introduction by Foley  and Varian , the notion of fairness has been one of the most extensively used notion to evaluate allocations on an ethical basis. Whereas there is an extensive literature on the efficiency properties of allocations in economies with uncertainty the concept of an envy-free allocation has not been widely studied in economies with uncertainty. We introduce two very natural notions of equity in an economy under uncertainty, namely ex ante and ex post equity, show they can contradict efficiency requirements. In particular, the set of ex ante efficient and ex post envy-free allocations may be empty. We nevertheless show that, under special circumstances, one may prove the existence of allocations that are both ex ante efficient and ex post envy-free. Such is the case, in particular, in an economy with individual risk and no aggregate risk.
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Bibliographic InfoPaper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00086032.
Date of creation: 2002
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Publication status: Published, Economics Bulletin, 2002, 4, 18, 1-7
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Fairness; uncerainty; envy;
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- Peter A. Diamond, 1967. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparison of Utility: Comment," Journal of Political Economy, University of Chicago Press, vol. 75, pages 765.
- H. R. Varian, 1973.
"Equity, Envy and Efficiency,"
115, Massachusetts Institute of Technology (MIT), Department of Economics.
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- de Clippel, Geoffroy, 2008.
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- Geoffroy de Clippel, 2004. "Equity, Envy and Efficiency under Asymmetric Information," Working Papers 2004-19, Brown University, Department of Economics.
- Maria Laura Pesce, 2011. "Are Asymmetrically Informed Agents Envious?," CSEF Working Papers 292, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Chew, Soo Hong & Sagi, Jacob S., 2012. "An inequality measure for stochastic allocations," Journal of Economic Theory, Elsevier, vol. 147(4), pages 1517-1544.
- Achille Basile & Maria Gabriella Graziano & Maria Laura Pesce, 2012. "On Fairness of Equilibria in Economies with Differential Information," CSEF Working Papers 303, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
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