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Social rationality, separability, and equity under uncertainty

Author

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  • FLEURBAEY, Marc

    () (CNRS, Université Paris Descartes, CERSES, France)

  • GAJDOS, Thibault

    () (CNRS, Ecole Polytechnique and CERSES, France)

  • ZUBER, Stéphane

    () (Université catholique de Louvain, CORE and Chair Lhoist Berghmans in Environmental Economics, Belgium)

Abstract

Harsanyi (1955) proved that, in the context of uncertainty, social ratio- nality and the Pareto principle impose severe constraints on the degree of priority for the worst-off that can be adopted in the social evaluation. Since then, the literature has hesitated between an ex ante approach that relaxes rationality (Diamond (1967)) and an ex post approach that fails the Pareto principle (Hammond (1983), Broome (1991)). The Hammond-Broome ex post approach conveniently retains the separable form of utilitarianism but does not make it explicit how to give priority to the worst-off, and how much disre- spect of individual preferences this implies. Fleurbaey (2008) studies how to incorporate a priority for the worst-off in an explicit formulation, but leaves aside the issue of ex ante equity in lotteries, retaining a restrictive form of consequentialism. We extend the analysis to a framework allowing for ex ante equity considerations to play a role in the ex post approach, and find a richer configuration of possible criteria. But the general outlook of the Harsanyian dilemma is confirmed in this more general setting.

Suggested Citation

  • FLEURBAEY, Marc & GAJDOS, Thibault & ZUBER, Stéphane, 2010. "Social rationality, separability, and equity under uncertainty," CORE Discussion Papers 2010037, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2010037
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    References listed on IDEAS

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    1. Blackorby, Charles & Donaldson, David & Weymark, John A., 1999. "Harsanyi's social aggregation theorem for state-contingent alternatives1," Journal of Mathematical Economics, Elsevier, vol. 32(3), pages 365-387, November.
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    Cited by:

    1. Fleurbaey, Marc & Zuber, Stéphane, 2015. "Discounting, beyond utilitarianism," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 9, pages 1-52.
    2. repec:eee:jetheo:v:169:y:2017:i:c:p:666-706 is not listed on IDEAS
    3. Fleurbaey, Marc & Zuber, Stéphane, 2017. "Fair management of social risk," Journal of Economic Theory, Elsevier, vol. 169(C), pages 666-706.
    4. Marc Fleurbaey & Stéphane Zuber, 2013. "Inequality aversion and separability in social risk evaluation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(3), pages 675-692, November.

    More about this item

    Keywords

    risk; inequality; social welfare; ex ante; ex post; fairness; Harsanyi theorem;

    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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