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Money metric utilitarianism

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  • Chambers, Christopher P.
  • Hayashi, Takashi

Abstract

We discuss a method of ranking allocations in economic environments which applies when we do not know the names or preferences of individual agents. We require that two allocations can be ranked with the knowledge only of agents present, their aggregate bundles, and community indifference sets—a condition we refer to as aggregate independence. We also postulate a basic Pareto and continuity property, and a property stating that when two disjoint economies and allocations are put together, the ranking in the large economy should be consistent with the rankings in the two smaller economies (reinforcement). We show that a ranking method satisfies these axioms if and only if there is a probability measure over the strictly positive prices for which the rule ranks allocations on the basis of the random-price money-metric utilitarian rule. This is a rule which computes the money-metric utility for each agent at each price, sums these, and then takes an expectation according to the probability measure. Copyright Springer-Verlag 2012
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  • Chambers, Christopher P. & Hayashi, Takashi, "undated". "Money metric utilitarianism," Working Papers 1295, California Institute of Technology, Division of the Humanities and Social Sciences.
    • Handle: RePEc:clt:sswopa:1295
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    File URL: http://www.hss.caltech.edu/SSPapers/sswp1295.pdf
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    Cited by:

    1. Bosmans, Kristof & Decancq, Koen & Ooghe, Erwin, 2018. "Who's afraid of aggregating money metrics?," Theoretical Economics, Econometric Society, vol. 13(2), May.
    2. Christopher P. Chambers & Alan D. Miller, 2014. "Inefficiency Measurement," American Economic Journal: Microeconomics, American Economic Association, vol. 6(2), pages 79-92, May.

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