Efficiency, equity, and social rationality under uncertainty

Kaname Miyagishima

Economic Theory, 2022, vol. 73, issue 1, No 8, 237-255

Abstract: Abstract In a simple model where agents’ monetary payoffs are uncertain, this paper examines the aggregation of subjective expected utility functions which are interpersonally noncomparable. A maximin social welfare criterion is derived from axioms of efficiency, ex post equity, and social rationality, combined with the independence of beliefs and risk preferences in riskless situations (Chambers and Echenique in Games Econ Behav 76:582–595, 2012). The criterion compares allocations by the values of the prospects composed of the statewise minimum payoffs evaluated by the certainty equivalents. Because of this construction, the criterion is egalitarian and risk averse.

Keywords: Efficiency; Equity; Social rationality; Fair social ordering; Heterogeneous beliefs; Spurious unanimity (search for similar items in EconPapers)
JEL-codes: D63 D71 D81 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s00199-020-01335-4

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