Fair management of social risk

Marc Fleurbaey and Stéphane Zuber

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: We provide a general method for extending social preferences defined for riskless economic environments to the context of risk and uncertainty. We apply the method to the problems of managing unemployment allowances (in the context of macroeconomic fluctuations) and catastrophic risks (in the context of climate change). The method guarantees ex post fairness and pays attention to individuals' risk attitudes, while ensuring rationality properties for social preferences, revisiting basic ideas from Harsanyi's celebrated aggregation theorem (Harsanyi, 1955). The social preferences that we obtain do not always take the form of an expected utility criterion, but they always satisfy statewise dominance. We obtain a new characterization of the maximin criterion when expected utility and minimal equity are combined. We also show non-expected utility individual preferences can be accommodated in the approach, although it raises issues regarding belief aggregation

Keywords: Social choice; fairness; uncertainty; social risk (search for similar items in EconPapers)
JEL-codes: D63 (search for similar items in EconPapers)
Date: 2014-03, Revised 2015-09
New Economics Papers: this item is included in nep-res and nep-upt
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Related works:
Journal Article: Fair management of social risk (2017)
Working Paper: Fair management of social risk (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:14016r

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