Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103931
Authors: 
Andonie, Costel
Kuzmics, Christoph
Rogers, Brian W.
Year of Publication: 
2014
Series/Report no.: 
Working Papers, Center for Mathematical Economics 512
Abstract: 
How should we make value judgments about wealth inequality? Harsanyi (1953) proposes to take an individual who evaluates her well-being by expected utility and ask her to evaluate the wealth possibilities ex-ante (i.e. before she finds her place in society, i.e., under the "veil of ignorance" of Rawls (1971)) assuming that she will be allocated any one of the possible wealth levels with equal probability. We propose a different notion of how wealth levels are allocated, based on a competition or contest. We find that inequality can be captured through the equilibrium properties of such a game. We connect the inequality measures so derived to existing measures of inequality, and demonstrate the conditions under which they satisfy the received key axioms of inequality measures (anonymity, homogeneity and the Pigou-Dalton transfer principle). Our approach also provides a natural way to discuss the tradeoff between greater total wealth and greater inequality.
Subjects: 
utilitarianism
inequality
contests
JEL: 
C72
C73
D63
D72
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
388.15 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.