Journal
THEORY AND DECISION
Volume 70, Issue 3, Pages 367-384Publisher
SPRINGER
DOI: 10.1007/s11238-010-9225-4
Keywords
Social welfare function; Aggregation of preferences; History independence
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The article shows that a Paretian social welfare function can be history independent and time consistent only if a stringent set of conditions is verified. Individual utilities must be additive. The social welfare function must be a linear combination of these utilities. Social preferences are stationary only if, in addition, all individuals have the same constant discount rate. The results are implemented in two frameworks: deterministic dynamic choice and dynamic choice under uncertainty. The applications highlight that the conditions are unlikely to be met by individual preferences, and that they severely restrict social preferences.
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