On fairness and welfare analysis under uncertainty

Jean Paul Chavas, Jay Coggins

Research output: Contribution to journalArticle

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Abstract

This paper investigates the role of fairness, uncertainty, and a "veil of ignorance" in efficient resource allocation. It focuses on the choice of private and public goods, the method of financing, as well as the choice of information available for public decision-making. A fair-equivalent and Pareto efficient allocation is presented using a maximin criterion defined in terms of individual willingness-to-pay. The paper investigates the role of information in public decision making in terms of its implications for both efficiency and fairness. While better information typically generates improved efficiency, it can also contribute to unfair allocations. The effects of asymmetric information are discussed.

Original languageEnglish (US)
Pages (from-to)203-228
Number of pages26
JournalSocial Choice and Welfare
Volume20
Issue number2
DOIs
StatePublished - Apr 1 2003

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