Research Details

Abstract

In the evaluation of public policies, a crucial distinction is between plans that involve purely idiosyncratic risk and policies that generate aggregate, correlated risk. While natural, this distinction is not captured by standard utilitarian aggregators. In this paper we revisit Harsanyi?s (1955) celebrated theory of preferences aggregation and develop a parsimonious generalization of utilitarianism. The theory we propose can capture sensitivity to aggregated risk, it is apt for studying large populations and is characterized by two simple axioms of preferences aggregation.

Type

Article

Author(s)

Nabil Al-Najjar, Luciano Pomatto

Date Published

2020

Citations

Al-Najjar, Nabil, and Luciano Pomatto. 2020. Aggregate Risk and the Pareto Principle. Journal of Economic Theory.(1): 1-26.