The Non-Existence of Representative Agents

Leeat Yariv and Matthew Jackson

No 13397, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We characterize environments in which there exists a representative agent: an agent who inherits the structure of preferences of the population that she represents. The existence of such a representative agent imposes strong restrictions on individual utility functions, requiring them to be linear in the allocation and additively separable in any parameter that characterizes agents' preferences (e.g., a risk aversion parameter, a discount factor, etc.). Commonly used classes of utility functions (exponentially discounted utility functions, CRRA or CARA utility functions, logarithmic functions, etc.) do not admit a representative agent.

Keywords: Representative agents; Preference aggregation; Revealed preference; Collective decisions (search for similar items in EconPapers)
JEL-codes: D03 D11 D71 D72 E24 (search for similar items in EconPapers)
Date: 2018-12
New Economics Papers: this item is included in nep-gth, nep-mac, nep-mic and nep-upt
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Working Paper: The Non-Existence of Representative Agents (2020)
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