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On efficiency in disagreement economies

Author

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  • Christian Heyerdahl-Larsen

    (BI Norwegian Business School)

  • Johan Walden

    (University of California at Berkeley)

Abstract

We analyze multiple-beliefs based efficiency measures in economies with risk and disagreement, including belief neutral efficiency and inefficiency, incomplete knowledge efficiency, efficiency based on unanimity, and utility aggregators that minimize Bergson welfare functions over multiple beliefs. We provide equivalence results under technical conditions that are satisfied in several work-horse economies, including the exchange economy and a standard economy with a linear production technology. We also provide several examples for which these measures differ. Our results show that the further away one gets from the standard exchange economy, the more the different multiple-beliefs based measures differ in the allocations they identify as efficient, in general. Consequently, the more important the choice of efficiency measure becomes.

Suggested Citation

  • Christian Heyerdahl-Larsen & Johan Walden, 2023. "On efficiency in disagreement economies," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 61(4), pages 763-799, November.
    • Handle: RePEc:spr:sochwe:v:61:y:2023:i:4:d:10.1007_s00355-023-01467-1
    DOI: 10.1007/s00355-023-01467-1
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    References listed on IDEAS

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