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An inequality measure for stochastic allocations

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  • Chew, Soo Hong
  • Sagi, Jacob S.

Abstract

Few papers in the literature on inequality measurement deal with uncertainty, particularly when the ranking of cohorts may not be fixed. We present a set of axioms implying such a class of inequality measures under uncertainty that is a one-parameter extension of the generalized Gini mean over the distribution of average allocations. The extension consists of a quadratic term accounting for inter-personal correlations. In particular, our measure can simultaneously accommodate a preference for “shared destiny”, a preference for probabilistic mixtures over unfair allocations, and a preference for fairness “for sure” over fairness in expectation.

Suggested Citation

  • Chew, Soo Hong & Sagi, Jacob S., 2012. "An inequality measure for stochastic allocations," Journal of Economic Theory, Elsevier, vol. 147(4), pages 1517-1544.
    • Handle: RePEc:eee:jetheo:v:147:y:2012:i:4:p:1517-1544
    DOI: 10.1016/j.jet.2011.05.002
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    References listed on IDEAS

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    Cited by:

    1. Qu, Xiangyu, 2022. "On the measurement of opportunity-dependent inequality under uncertainty," Journal of Mathematical Economics, Elsevier, vol. 101(C).
    2. Gajdos, Thibault & Weymark, John A., 2012. "Introduction to inequality and risk," Journal of Economic Theory, Elsevier, vol. 147(4), pages 1313-1330.
    3. Robin Chark & Soo Chew, 2015. "A neuroimaging study of preference for strategic uncertainty," Journal of Risk and Uncertainty, Springer, vol. 50(3), pages 209-227, June.
    4. Fleurbaey, Marc & Gajdos, Thibault & Zuber, Stéphane, 2015. "Social rationality, separability, and equity under uncertainty," Mathematical Social Sciences, Elsevier, vol. 73(C), pages 13-22.
    5. Xiangyu Qu, 2024. "Inequality measurement with coarse data," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 62(2), pages 367-396, March.
    6. Gutjahr, Walter J., 2021. "Inequity-averse stochastic decision processes," European Journal of Operational Research, Elsevier, vol. 288(1), pages 258-270.
    7. Luciano Andreozzi, 2019. "On Being Inequality Averse: Measurement and Behavioral Characterization," DEM Working Papers 2019/10, Department of Economics and Management.
    8. Margaret Meyer & Bruno Strulovici, 2013. "The Supermodular Stochastic Ordering," Discussion Papers 1563, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    9. Fleurbaey, Marc & Zuber, Stéphane, 2017. "Fair management of social risk," Journal of Economic Theory, Elsevier, vol. 169(C), pages 666-706.
    10. Meyer, Margaret & Strulovici, Bruno, 2012. "Increasing interdependence of multivariate distributions," Journal of Economic Theory, Elsevier, vol. 147(4), pages 1460-1489.
    11. Margaret Meyer & Bruno Strulovici, 2013. "Beyond Correlation: Measuring Interdependence Through Complementarities," Economics Series Working Papers 655, University of Oxford, Department of Economics.
    12. Bin Miao & Songfa Zhong, 2018. "Probabilistic social preference: how Machina’s Mom randomizes her choice," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(1), pages 1-24, January.

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    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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