The Non-Existence of Representative Agents

17 Pages Posted: 1 Nov 2015 Last revised: 15 May 2019

See all articles by Matthew O. Jackson

Matthew O. Jackson

Stanford University - Department of Economics; Santa Fe Institute; Canadian Institute for Advanced Research (CIFAR)

Leeat Yariv

Princeton University

Multiple version iconThere are 2 versions of this paper

Date Written: May 12, 2019

Abstract

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

Jackson, Matthew O. and Yariv, Leeat, The Non-Existence of Representative Agents (May 12, 2019). Available at SSRN: https://ssrn.com/abstract=2684776 or http://dx.doi.org/10.2139/ssrn.2684776

Matthew O. Jackson (Contact Author)

Stanford University - Department of Economics ( email )

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HOME PAGE: http://www.stanford.edu/~jacksonm

Santa Fe Institute

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Canadian Institute for Advanced Research (CIFAR) ( email )

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Canada

Leeat Yariv

Princeton University ( email )

Princeton, NJ 08544-1021
United States

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