Welfare Egalitarianism with Other-Regarding Preferences

Discussion Papers on Business and Economics, University of Southern Denmark, 22/2014

33 Pages Posted: 20 Dec 2014

See all articles by Rafael Treibich

Rafael Treibich

University of Southern Denmark - Department of Business and Economics

Date Written: December 18, 2014

Abstract

We study the fair allocation of a one-dimensional and perfectly divisible good when individuals have other-regarding preferences. Assuming no legitimate claims and purely ordinal preferences, how should society measure social welfare so as to satisfy basic principles of efficiency and fairness? We define the egalitarian equivalent as the size of the egalitarian allocation which leaves the individual indifferent to the current allocation. In two simple models of average and positional externalities, we characterize the class of social preferences which give full priority to the individual with the lowest egalitarian equivalent in the economy.

Keywords: Fair allocation, Social welfare, Externalities, Behavioral economics

JEL Classification: D62, D63, D64, D71

Suggested Citation

Treibich, Rafael, Welfare Egalitarianism with Other-Regarding Preferences (December 18, 2014). Discussion Papers on Business and Economics, University of Southern Denmark, 22/2014, Available at SSRN: https://ssrn.com/abstract=2540511 or http://dx.doi.org/10.2139/ssrn.2540511

Rafael Treibich (Contact Author)

University of Southern Denmark - Department of Business and Economics ( email )

DK-5230 Odense
Denmark

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