Econometrica: May 1999, Volume 67, Issue 3

Relative Utilitarianism
p. 471-498

Amrita Dhillon, Jean‐François Mertens

‘If empirically meaningful interpersonal comparisons have to be based on indifference maps, as we have argued, then the Independence of Irrelevant Alternatives must be violated. The information which enables us to assert that individual prefers to more strongly than prefers to must be based on comparisons by and of and not only to each other but also to other alternatives. . In a framework of preferences over lotteries, we show that an axiom system consisting of weakened versions of Arrow's axioms has a unique solution. ‘Relative Utilitarianism’ consists of first normalizing individual von Neumann‐Morgenstern utilities between 0 and 1 and then summing them.

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