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Unequal Uncertainties and Uncertain Inequalities: An Axiomatic Approach

  • Thibault Gajdos

    ()

    (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - CNRS : UMR8594 - Université Paris I - Panthéon-Sorbonne)

  • Eric Maurin

    (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique)

In this paper, we provide an axiomatic characterization of social welfare functions for uncertain incomes. Our most general result is that a small number of reasonable assumptions regarding welfare orderings under uncertainty rule out pure ex ante as well as pure ex post evaluations. Any social welfare function that satisfies these axioms should lie strictly between the ex ante and the ex post evaluations of income distributions. We also provide an axiomatic characterization of the weighted average of the minimum and the maximum of ex post and the ex ante evaluations.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00085940.

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Date of creation: 2004
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Publication status: Published, Journal of Economic Theory, 2004, 116, 1, 93-118
Handle: RePEc:hal:cesptp:halshs-00085940
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00085940
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