The utilitarian–maximin social welfare function and anomalies in social choice. (20th September 2020)

• Record Type: Journal Article
• Authors: Schneider, Mark; Kim, Byung‐Cheol
• Is Part Of: Southern economic journal. Volume 87:Number 2(2020)
• Page Start: 629
• Page End: 646
• Publication Date: 2020-09-20
• Subjects: maximin principle -- skewness dependence -- social Allais paradox -- social choice common ratio effect -- social welfare ordering -- utilitarianism; Southern States -- Economic conditions -- Periodicals; Economics -- Periodicals; Economic history; Economics; Southern States; Periodicals; 330.975005
• DOI: 10.1002/soej.12464
• Languages: English
• ISSNs: 0038-4038

Abstract

Abstract: Two major criteria of distributive justice are the utilitarian criterion and the maximin criterion. We offer a simple axiomatic characterization of a mixed utilitarian–maximin social welfare function. This social welfare function explains recent empirical violations of the standard cardinal social choice theory such as the social Allais paradox and the social common ratio effect. In addition, it offers a new foundation for the positively skewed wealth distributions in society. It also provides an objective function for mechanism design applications that trades off maximizing surplus and minimizing inequality.