An Inequality Measure for Stochastic Allocations
Soo Hong Chew
Hong Kong University of Science & Technology - Department of Economics; National University of Singapore (NUS) - Department of Business Policy
Jacob S. Sagi
Kenan-Flagler Business School, UNC Chapel Hill
May 13, 2011
Few papers in the literature on inequality measurement deal with uncertainty, particularly when the ranking of cohorts may not be fixed. We present a set of axioms implying such a class of inequality measures under uncertainty that is a one-parameter extension of the generalized Gini mean over the distribution of average allocations. The extension consists of a quadratic term accounting for inter-personal correlations. In particular, our measure can simultaneously accommodate a preference for "shared destiny", a preference for probabilistic mixtures over unfair allocations, and a preference for fairness "for sure" over fairness in expectation.
Number of Pages in PDF File: 37working papers series
Date posted: May 13, 2011
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