An Inequality Measure for Stochastic Allocations

37 Pages Posted: 13 May 2011

See all articles by Soo Hong Chew

Soo Hong Chew

Southwestern University of Finance and Economics; National University of Singapore

Jacob S. Sagi

University of North Carolina Kenan-Flagler Business School

Date Written: May 13, 2011

Abstract

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.

Suggested Citation

Chew, Soo Hong and Sagi, Jacob, An Inequality Measure for Stochastic Allocations (May 13, 2011). Available at SSRN: https://ssrn.com/abstract=1840968 or http://dx.doi.org/10.2139/ssrn.1840968

Soo Hong Chew

Southwestern University of Finance and Economics ( email )

Hong Yuan Building
Chengdu, Sichuan 631000
China

National University of Singapore ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

Jacob Sagi (Contact Author)

University of North Carolina Kenan-Flagler Business School ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States

HOME PAGE: http://public.kenan-flagler.unc.edu/faculty/sagij/

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