The Non-Existence of Representative Agents

20 Pages Posted: 17 Dec 2018 Last revised: 20 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: December 2018

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: Collective Decisions, Preference Aggregation, Representative Agents, Revealed Preference

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

Suggested Citation

Jackson, Matthew O. and Yariv, Leeat, The Non-Existence of Representative Agents (December 2018). CEPR Discussion Paper No. DP13397. Available at SSRN: https://ssrn.com/abstract=3302656

Matthew O. Jackson (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
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HOME PAGE: http://www.stanford.edu/~jacksonm

Santa Fe Institute

1399 Hyde Park Road
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Canadian Institute for Advanced Research (CIFAR) ( email )

180 Dundas Street West, Suite 1400
Toronto, Ontario
Canada

Leeat Yariv

Princeton University ( email )

Princeton, NJ 08544-1021
United States

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