The Pareto principle of optimal inequality

Bommier, Antoine;Zuber, Stéphane
(2009) , 15 pages

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  • Bommier, AntoineToulouse School of Economics
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  • Zuber, StéphaneUCLouvain
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Abstract
The Pareto principle is often viewed as a mild requirement compatible with a variety of value judgements. In particular, it is generally thought that it can accommodate different views on the desirable degree of equality. We show that this is generally not true in intertemporal models where some uncertainty prevails. To do so, we formalize the concept of inequality aversion. We show that different degrees of inequality aversion are not possible in typical models of time-consistent dynamic decision under uncertainty.
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Bommier, A., & Zuber, S. (2009). The Pareto principle of optimal inequality (Core Discussion Papers 2009/9). https://hdl.handle.net/2078.5/249750