L18

Question 1

What is the utilitarianism view?

Answer 1

Social choices should attempt to maximize the well-being of the individuals
Individual decision maker’s preferences reflect their true value which they know better than anyone else can
TF best for individuals to decide for themselves what is best for them

Question 2

Explain what Harsanyi proposed?

Answer 2

He proposed to determine the total social utility from the utility of a single individual, the PLANNER

Question 3

What 2 conditions of individual and social rationality must the planner’s and individuals’ preference orderings follow? What therefore follows from this?

Answer 3

1) Each must rank social options AND all ‘lotteries’ involving social options
2) Rankings must meet all the assumptions of expected utility
Follows that each individual’s preference ordering can be represented by means of a utility function

Question 4

Notation for Harsanyi’s theorem?

Answer 4

Let ui(x) be the utility the i’th individual assigns to option x and W(x) be the utility the planner assigns to option x

Question 5

What are the 2 axiomatic conditions for Harsanyi?

Answer 5

1) Strong Pareto condition:
a) If each individual is indifferent between two options, so is the Planner; b) if no individual prefers x to y and at least one prefers y to x, the Planner prefers y to x too

2) Anonymity condition (same as before)

Question 6

Formally, tf, what is Harsanyi’s theorem?

Answer 6

If the individuals and the planner satisfy the conditions of individual and social rationality and the Planner meets the anonymity and strong Pareto condition, then for each prospect x:

W(x) = u1(x) + u2(x) + … + un(x)

Question 7

6 criticisms/questionings of utilitarianism view?

Answer 7

1) Should everyone have an equal say? (criminals? children?)
2) Is there a unique correct way to make tradeoffs so each outcome receives a utility?
3) Do people use the same scale of utility? (relative concept)
4) Do we need to maximize utility now, or for the future? (eg. global warming)
5) Is it ethical for a planner to make the decision for someone else?
6) Should an expert in a field have a greater say in what happens (paternalism)
READ this discussion in her notes. See liberal paternalism and nudging