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Systems of Benevolent Utility Functions
Author(s) -
Bergstrom Theodore C.
Publication year - 1999
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/1097-3923.00004
Subject(s) - countable set , diagonal , mathematical economics , interdependence , class (philosophy) , altruism (biology) , von neumann–morgenstern utility theorem , utility theory , mathematics , expected utility hypothesis , economics , pure mathematics , computer science , social psychology , sociology , psychology , social science , geometry , artificial intelligence
This paper studies systems of utility functions in which each person's utility depends on his or her own consumption as well as on the utilities of others. We consider the question of when a system of interdependent utility functions induces unique utility functions over allocations and identifies the class of transformations on interdependent utility functions that are equivalent in the sense of inducing the same preferences over allocations. We show that well‐behaved systems of this kind can be studied by means of the theory of dominant‐diagonal matrices and that the theory of dominant‐diagonal matrices with finitely many elements extends in a satisfactory way to denumerable matrices. The theory of denumerable dominant diagonal matrices allows an elegant analysis of systems of intergenerational benevolence. We also revisit and extend the theory of two‐sided altruism as formulated by Kimball and by Hori and Kanaya.