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Additive representation of separable preferences over infinite products

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  • Pivato, Marcus

Abstract

Let X be a set of states, and let I be an infinite indexing set. Our first main result states that any separable, permutation-invariant preference order (>) on X^I admits an additive representation. That is: there exists a linearly ordered abelian group A and a `utility function' u:X-->A such that, for any x,y in X^I which differ in only finitely many coordinates, we have x>y if and only if the sum of [u(x_i)-u(y_i)] over all i in I is positive. Our second result states: If (>) also satisfies a weak continuity condition, then, for any x,y in X^I, we have x>y if and only if the `hypersum' of [u(x_i)-u(y_i)] over all i in I is positive. The `hypersum' is an infinite summation operator defined using methods from nonstandard analysis. Like an integration operator or series summation operator, it allows us to define the sum of an infinite set of values. However, unlike these operations, the hypersum does not depend on some form of convergence (recall: A has no topology) ---it is always well-defined. Also, unlike an integral, the hypersum does not depend upon a sigma-algebra or measure on the indexing set I. The hypersum takes values in a linearly ordered abelian group A*, which is an ultrapower extension of A. These results are applicable to infinite-horizon intertemporal choice, choice under uncertainty, and variable-population social choice.

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  • Pivato, Marcus, 2011. "Additive representation of separable preferences over infinite products," MPRA Paper 28262, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:28262
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    2. János Flesch & Dries Vermeulen & Anna Zseleva, 2019. "Catch games: the impact of modeling decisions," International Journal of Game Theory, Springer;Game Theory Society, vol. 48(2), pages 513-541, June.
    3. McCarthy, David & Mikkola, Kalle & Thomas, Teruji, 2016. "Utilitarianism with and without expected utility," MPRA Paper 72578, University Library of Munich, Germany.
    4. Nehring, Klaus & Pivato, Marcus, 2019. "Majority rule in the absence of a majority," Journal of Economic Theory, Elsevier, vol. 183(C), pages 213-257.
    5. Pivato, Marcus, 2013. "Multiutility representations for incomplete difference preorders," Mathematical Social Sciences, Elsevier, vol. 66(3), pages 196-220.
    6. David McCarthy & Kalle Mikkola & Teruji Thomas, 2019. "Aggregation for potentially infinite populations without continuity or completeness," Papers 1911.00872, arXiv.org.
    7. Han Bleichrodt & Umut Keskin & Kirsten I. M. Rohde & Vitalie Spinu & Peter Wakker, 2015. "Discounted Utility and Present Value—A Close Relation," Operations Research, INFORMS, vol. 63(6), pages 1420-1430, December.
    8. Pivato, Marcus, 2013. "Variable-population voting rules," Journal of Mathematical Economics, Elsevier, vol. 49(3), pages 210-221.
    9. Marcus Pivato, 2015. "Social choice with approximate interpersonal comparison of welfare gains," Theory and Decision, Springer, vol. 79(2), pages 181-216, September.
    10. Flesch, János & Vermeulen, Dries & Zseleva, Anna, 2017. "Zero-sum games with charges," Games and Economic Behavior, Elsevier, vol. 102(C), pages 666-686.

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    More about this item

    Keywords

    additive; separable; intertemporal choice; intergenerational choice; risk; uncertainty; variable-population social choice; generalized utilitarian; nonstandard analysis; hyperreal; linearly ordered abelian group; non-Archimedean utility; lexicographical utility;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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