We thank John Broome, Jurgen Eichberger, Marc Fleurbaey, Edi Karni, Bart Lipman, Philippe Mongin, Stephen Morris, Heve Moulin, Klaus Nehring, David Pearce, John Quiggin, John Roemer, John Weymark, three referees, and a co-editor for many helpful comments. Atsushi Kajii thanks Grant-in-Aid for Scientific Research S (Grant 90152298) and the Inamori Foundation for support. Zvi Safra thanks the Israel Science Foundation (Grant 1299/05) and the Henry Crown Institute of Business Research for support.
Generalized Utilitarianism and Harsanyi's Impartial Observer Theorem
Article first published online: 3 DEC 2010
© 2010 The Econometric Society
Volume 78, Issue 6, pages 1939–1971, November 2010
How to Cite
Grant, S., Kajii, A., Polak, B. and Safra, Z. (2010), Generalized Utilitarianism and Harsanyi's Impartial Observer Theorem. Econometrica, 78: 1939–1971. doi: 10.3982/ECTA6712
- Issue published online: 3 DEC 2010
- Article first published online: 3 DEC 2010
- Manuscript received September, 2006; final revision received April, 2010.
- Generalized utilitarianism;
- impartial observer;
- social welfare function;
- ex ante egalitarianism
Harsanyi's impartial observer must consider two types of lotteries: imaginary identity lotteries (“accidents of birth”) that she faces as herself and the real outcome lotteries (“life chances”) to be faced by the individuals she imagines becoming. If we maintain a distinction between identity and outcome lotteries, then Harsanyi-like axioms yield generalized utilitarianism, and allow us to accommodate concerns about different individuals' risk attitudes and concerns about fairness. Requiring an impartial observer to be indifferent as to which individual should face similar risks restricts her social welfare function, but still allows her to accommodate fairness. Requiring an impartial observer to be indifferent between identity and outcome lotteries, however, forces her to ignore both fairness and different risk attitudes, and yields a new axiomatization of Harsanyi's utilitarianism.