Published September 2020
| Submitted
Journal Article
Open
Aggregate Risk and the Pareto Principle
- Creators
- Al-Najjar, Nabil I.
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Pomatto, Luciano
Chicago
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Abstract
In the evaluation of public policies, a crucial distinction is between plans that involve purely idiosyncratic risk and those that generate correlated, or aggregate, 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 captures sensitivity to aggregate risk in large populations and can be characterized by two simple axioms of preferences aggregation.
Additional Information
© 2020 Elsevier Inc. Received 4 November 2018, Revised 13 June 2020, Accepted 16 June 2020, Available online 26 June 2020. We are grateful to the co-editor, Pietro Ortoleva, and to three anonymous referees for their helpful comments. In addition, we thank Larry Blume, Amrita Dhillon, Federico Echenique, Atsushi Kajii, Edi Karni, and Kota Saito.Attached Files
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Additional details
- Eprint ID
- 94493
- Resolver ID
- CaltechAUTHORS:20190405-092508707
- Created
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2019-04-05Created from EPrint's datestamp field
- Updated
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2021-11-16Created from EPrint's last_modified field