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The impartial observer under uncertainty

Author

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  • Berens, Stefan

    (Center for Mathematical Economics, Bielefeld University)

  • Chochua, Lasha

    (Center for Mathematical Economics, Bielefeld University)

Abstract

This paper extends Harsanyi’s Impartial Observer Theorem by introducing Knightian Uncertainty in the form of individual belief systems. It features an axiomatic framework of societal decision-making in the presence of individual uncertainty. The model allows the analysis of scenarios where individuals agree on the ranking but not on the likelihood of social outcomes. The preferences of the impartial observer are represented by a weighted sum of utilities - each representing individual preferences with different belief systems. In order to incorporate common criticism of the framework of Harsanyi (1953), our approach is based on the generalized version by Grant et al. (2010). The belief systems are introduced as second-order beliefs following Seo (2009).

Suggested Citation

  • Berens, Stefan & Chochua, Lasha, 2017. "The impartial observer under uncertainty," Center for Mathematical Economics Working Papers 576, Center for Mathematical Economics, Bielefeld University.
  • Handle: RePEc:bie:wpaper:576
    as

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    File URL: https://pub.uni-bielefeld.de/download/2913226/2913227
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    References listed on IDEAS

    as
    1. Mongin, Philippe, 2001. "The impartial observer theorem of social ethics," Economics and Philosophy, Cambridge University Press, vol. 17(2), pages 147-179, October.
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    3. John C. Harsanyi, 1953. "Cardinal Utility in Welfare Economics and in the Theory of Risk-taking," Journal of Political Economy, University of Chicago Press, vol. 61, pages 434-434.
    4. Peter Klibanoff & Massimo Marinacci & Sujoy Mukerji, 2005. "A Smooth Model of Decision Making under Ambiguity," Econometrica, Econometric Society, vol. 73(6), pages 1849-1892, November.
    5. Eric Danan & Thibault Gajdos & Brian Hill & Jean-Marc Tallon, 2016. "Robust Social Decisions," American Economic Review, American Economic Association, vol. 106(9), pages 2407-2425, September.
    6. Eric Danan & Thibault Gajdos & Brian Hill & Jean-Marc Tallon, 2016. "Robust Social Decisions," American Economic Review, American Economic Association, vol. 106(9), pages 2407-2425, September.
    7. Thibault Gajdos & Feriel Kandil, 2008. "The ignorant observer," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 31(2), pages 193-232, August.
    8. Simon Grant & Atsushi Kajii & Ben Polak & Zvi Safra, 2010. "Generalized Utilitarianism and Harsanyi's Impartial Observer Theorem," Econometrica, Econometric Society, vol. 78(6), pages 1939-1971, November.
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    10. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09iepso50rh is not listed on IDEAS
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    Keywords

    Impartial Observer; Uncertainty; Utilitarianism;
    All these keywords.

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