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The ignorant observer

Most prominent models of economic justice (and especially those proposed by Harsanyi and Rawls) are based on the assumption that impartiality is required for making moral decisions. However, although Harsanyi and Rawls agree on that, and furthermore agree on the fact that impartiality can be obtained under appropriate conditions of ignorance, they strongly disagree on the consequences of these assumptions. According to Harsanyi, they provide a justification for the utilitarian doctrine, whereas Rawls considers that they imply egalitarianism. We propose here an extension of Harsanyi's Impartial Observer Theorem, that is based on the representation of ignorance as the set of all possible probability distributions. We obtain a characterization of the observer's preferences that, under our most restrictive conditions, is a linear combination of Harsanyi's and Rawls' criteria. Furthermore, this representation is ethically meaningful, in the sense that individuals' utilities are cardinally measurable and unit comparable. This allows us to conclude that the impartiality requirement cannot be used to decide between Rawls' and Harsanyi's positions. Finally, we defend the view that a (strict) combination of Harsanyi's and Rawls' criteria provides a reasonable rule for social decisions.

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File URL: ftp://mse.univ-paris1.fr/pub/mse/cahiers2006/V06041.pdf
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Paper provided by Université Panthéon-Sorbonne (Paris 1) in its series Cahiers de la Maison des Sciences Economiques with number v06041.

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Length: 37 pages
Date of creation: Feb 2005
Date of revision: Mar 2006
Handle: RePEc:mse:wpsorb:v06041
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  1. Binmore, Ken, 1989. "Social Contract I: Harsani and Rawls," Economic Journal, Royal Economic Society, vol. 99(395), pages 84-102, Supplemen.
  2. Amrita Dhillon & Jean-Francois Mertens, 1999. "Relative Utilitarianism," Econometrica, Econometric Society, vol. 67(3), pages 471-498, May.
  3. Thibault Gadjos & Jean-Marc Tallon & Jean-Christophe Vergnaud, 2004. "Coping with Imprecise Information : A Decision Theoretic Approach," Working Papers 2004-14, Centre de Recherche en Economie et Statistique.
  4. Thibault Gajdos & Jean-Marc Tallon & Jean-Christophe Vergnaud, 2002. "Decision Making with Imprecise Probabilistic Information," ICER Working Papers - Applied Mathematics Series 18-2003, ICER - International Centre for Economic Research, revised May 2003.
  5. Skiadas, Costis, 1997. "Subjective Probability under Additive Aggregation of Conditional Preferences," Journal of Economic Theory, Elsevier, vol. 76(2), pages 242-271, October.
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  7. John A. Weymark, 2005. "Measurement Theory and the Foundations of Utilitarianism," Vanderbilt University Department of Economics Working Papers 0507, Vanderbilt University Department of Economics.
  8. 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.
  9. MORENO-TERNERO, Juan D. & ROEMER, John E., 2005. "Objectivity, priority, and the veil of ignorance," CORE Discussion Papers 2005081, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. Epstein, Larry G & Segal, Uzi, 1992. "Quadratic Social Welfare Functions," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 691-712, August.
  11. Uzi Segal, 2000. "Let's Agree That All Dictatorships Are Equally Bad," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 569-589, June.
  12. P. Mongin., 1999. "The impartial observer theorem of social ethics," THEMA Working Papers 99-33, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  13. Chew, Soo Hong, 1983. "A Generalization of the Quasilinear Mean with Applications to the Measurement of Income Inequality and Decision Theory Resolving the Allais Paradox," Econometrica, Econometric Society, vol. 51(4), pages 1065-92, July.
  14. David Schmeidler, 1989. "Subjective Probability and Expected Utility without Additivity," Levine's Working Paper Archive 7662, David K. Levine.
  15. Karni, Edi, 2007. "Foundations of Bayesian theory," Journal of Economic Theory, Elsevier, vol. 132(1), pages 167-188, January.
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  17. Cohen, Michele & Jaffray, Jean-Yves, 1980. "Rational Behavior under Complete Ignorance," Econometrica, Econometric Society, vol. 48(5), pages 1281-99, July.
  18. Edi Karni, 1998. "Impartiality: Definition and Representation," Econometrica, Econometric Society, vol. 66(6), pages 1405-1416, November.
  19. Thibault Gajdos & Takashi Hayashi & Jean-Marc Tallon & Jean-Christophe Vergnaud, 2008. "Attitude toward imprecise information," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00451982, HAL.
  20. Peter Klibanoff, 2001. "Characterizing uncertainty aversion through preference for mixtures," Social Choice and Welfare, Springer, vol. 18(2), pages 289-301.
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  24. repec:ubc:bricol:90-03 is not listed on IDEAS
  25. Dekel, Eddie, 1986. "An axiomatic characterization of preferences under uncertainty: Weakening the independence axiom," Journal of Economic Theory, Elsevier, vol. 40(2), pages 304-318, December.
  26. 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.
  27. Karni, Edi & Safra, Zvi, 2000. "An extension of a theorem of von Neumann and Morgenstern with an application to social choice theory," Journal of Mathematical Economics, Elsevier, vol. 34(3), pages 315-327, November.
  28. Chateauneuf, Alain, 1991. "On the use of capacities in modeling uncertainty aversion and risk aversion," Journal of Mathematical Economics, Elsevier, vol. 20(4), pages 343-369.
  29. Costis Skiadas, 1997. "Conditioning and Aggregation of Preferences," Econometrica, Econometric Society, vol. 65(2), pages 347-368, March.
  30. Barbera, S. & Bossert, W. & Pattanaik, P.K., 2001. "Ranking Sets of Objects," Cahiers de recherche 2001-02, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  31. Peter A. Diamond, 1967. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparison of Utility: Comment," Journal of Political Economy, University of Chicago Press, vol. 75, pages 765.
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