Preference Aggregation with a Robust Pareto Criterion

Chen Li ()

No 1086, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: We present a new Pareto criterion to provide a minimal guidance to a social planner, who is concerned by the robustness of social decision with respect to imprecise beliefs of the true probability distribution over the state space. This new criterion, the obvious belief-free Pareto criterion, implies that the social planner is necessarily ambiguity averse. We show that given the set of reasonable beliefs and the set of individual risk preferences, the obvious belief-free Pareto criterion is the only axiom needed to characterize Maxmin Expected Utility social preferences. This result further brings us a preference aggregation theorem for Subjective Expected Utility individuals: A Maxmin Expected Utility social planner can linearly aggregate individual tastes and beliefs simultaneously if and only if s/he respects the obvious belief-free Pareto criterion.

Keywords: Decision under uncertainty; Pareto dominance; Pareto efficiency; Preference aggregation (search for similar items in EconPapers)
JEL-codes: D60 D71 D81 (search for similar items in EconPapers)
Pages: 37pages
Date: 2022-12
New Economics Papers: this item is included in nep-mic and nep-upt
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