Non-Rationalizability of Utilitarian Consistent Choice Functions by Continuous Social Welfare Orderings

Somdeb Lahiri

IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: In much of the applied welfare economics, one finds the recurrent use of utilitarian objective functions, in arriving at social decisions. Apart from being completely insensitive to distributional issues, the utilitarian rule does not make single valued choices. The purpose of this paper is to show that choice functions which are utilitarian consistent (i.e. formed by selecting a point from the set of maximizers of a utilitarian objective function) cannot be rationalized by a continuous social welfare ordering. This would imply espousing kinds of objectives for capital budgeting problems other than the usual utilitarian one, if one desires to have a rational basis for investment planning decisions. A further result noted in the paper is that if a choice function is utilitarian consistent and symmetric then it cannot be rationalized by a social welfare function. This strengthens considerably the earlier result.

Date: 1996-11-01
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iim:iimawp:wp01418

Access Statistics for this paper

More papers in IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department Contact information at EDIRC.
Bibliographic data for series maintained by ().