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Representation and aggregation of preferences under uncertainty

Thibault Gajdos (), Jean-Marc Tallon () and Jean-Christophe Vergnaud ()

Journal of Economic Theory, 2008, vol. 141, issue 1, 68-99

Abstract: We axiomatize in the Anscombe-Aumann setting a wide class of preferences called rank-dependent additive preferences that includes most known models of decision under uncertainty as well as state dependent versions of these models. We prove that aggregation is possible and necessarily linear if and only if (society's) preferences are uncertainty neutral. The latter means that society cannot have a non-neutral attitude toward uncertainty on a subclass of acts. A corollary to our theorem is that it is not possible to aggregate multiple prior agents, even when they all have the same set of priors. A number of ways to restore the possibility of aggregation are then discussed.

Date: 2008
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Handle: RePEc:eee:jetheo:v:141:y:2008:i:1:p:68-99