The Non-Existence of Representative Agents

Abstract

We characterize environments having a representative agent: an agent whose preferences over aggregate alternatives correspond to a weighted average of the population's utilities for the disaggregated alternatives. The existence of 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.).

Keywords: Representative Agents, Collective Decisions

JEL Classification: D72, D71, D03, D11, E24