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Assessing risky social situations

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This paper re-examines the welfare economics of risk. It singles out a class of criteria, the “expected equally-distributed equivalent”, as the unique class which avoids serious drawbacks of existing approaches. Such criteria behave like ex-post criteria when the final statistical distribution of wellbeing is known ex ante, and like ex-ante criteria when risk generates no inequality. The paper also provides a new result on the tension between inequality aversion and respect of individual ex ante preferences, in the vein of Harsanyi’s aggregation theorem.

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en

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application/pdf

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http://eprints.lse.ac.uk/27006/1/Assessing_risky_social_situations_%28LSERO%29.pdf

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