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Social preference under twofold uncertainty

Philippe Mongin and Marcus Pivato ()

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate the conflict between the ex ante and ex post criteria of social welfare in a novel axiomatic framework of individual and social decisions, which distinguishes between a subjective and an objective source of uncertainty. This framework permits us to endow the individuals and society not only with ex ante and ex post preferences, as is classically done, but also with interim preferences of two kinds, and correspondingly, to introduce interim forms of the Pareto principle. After characterizing the ex ante and ex post criteria, we present a first solution to their conflict that amounts to extending the former as much possible in the direction of the latter. Then, we present a second solution, which goes in the opposite direction, and is our preferred one. This solution combines the ex post criterion with an objective interim Pareto principle, which avoids the pitfalls of the ex ante Pareto principle, and especially the problem of "spurious unanimity" discussed in the literature. Both solutions translate the assumed Pareto conditions into weighted additive utility representations, and both attribute common individual probability values only to the objective source of uncertainty.

Keywords: Ex ante social welfare; ex post social welfare; objective versus subjective uncertainty; Pareto principle; separability; Harsanyi social aggregation theorem; spurious unanimity. (search for similar items in EconPapers)
JEL-codes: D70 D81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hpe, nep-mic and nep-upt
Date: 2016-06-05
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Related works:
Working Paper: Social Preference Under Twofold Uncertainty (2016) Downloads
Working Paper: Social Preference Under Twofold Uncertainty (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:71776

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