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Fairness under Uncertainty

Thibault Gajdos () and Jean-Marc Tallon ()
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Jean-Marc Tallon: EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: Ever since its introduction by Foley [1967] and Varian [1974], the notion of fairness has been one of the most extensively used notion to evaluate allocations on an ethical basis. Whereas there is an extensive literature on the efficiency properties of allocations in economies with uncertainty the concept of an envy-free allocation has not been widely studied in economies with uncertainty. We introduce two very natural notions of equity in an economy under uncertainty, namely ex ante and ex post equity, show they can contradict efficiency requirements. In particular, the set of ex ante efficient and ex post envy-free allocations may be empty. We nevertheless show that, under special circumstances, one may prove the existence of allocations that are both ex ante efficient and ex post envy-free. Such is the case, in particular, in an economy with individual risk and no aggregate risk.

Keywords: Fairness; uncerainty; envy (search for similar items in EconPapers)
Date: 2002
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00086032
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Published in Economics Bulletin, Economics Bulletin, 2002, 4 (18), pp.1-7

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