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Title: The Non-Existence of Representative Agents

Author(s): Matthew O. Jackson and Leeat Yariv

Publication Date: December 2018

Keyword(s): Collective Decisions, Preference Aggregation, Representative Agents and Revealed Preference

Programme Area(s): Industrial Organization, Macroeconomics and Growth and Public Economics

Abstract: We characterize environments in which there exists a representative agent: an agent who inherits the structure of preferences of the population that she represents. The existence of such a representative agent imposes strong restrictions on individual utility functions, requiring them to be linear in the allocation and additively separable in any parameter that characterizes agents' preferences (e.g., a risk aversion parameter, a discount factor, etc.). Commonly used classes of utility functions (exponentially discounted utility functions, CRRA or CARA utility functions, logarithmic functions, etc.) do not admit a representative agent.

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Bibliographic Reference

Jackson, M and Yariv, L. 2018. 'The Non-Existence of Representative Agents'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13397