The Non-Existence of Representative Agents
17 Pages Posted: 1 Nov 2015 Last revised: 15 May 2019
Date Written: May 12, 2019
We characterize environments in which there exists a representative agent: an agent who inherits the structure of preferences of the population that she represents. The existence of such a representative agent imposes strong restrictions on individual utility functions---requiring them to be linear in the allocation and additively separable in any parameter that characterizes agents' preferences (e.g., a risk aversion parameter, a discount factor, etc.). Commonly used classes of utility functions (exponentially discounted utility functions, CRRA or CARA utility functions, logarithmic functions, etc.) do not admit a representative agent.
Keywords: Representative Agents, Collective Decisions
JEL Classification: D72, D71, D03, D11, E24
Suggested Citation: Suggested Citation