DP13397 The Non-Existence of Representative Agents
|Author(s):||Matthew O. Jackson, Leeat Yariv|
|Publication Date:||December 2018|
|Keyword(s):||Collective Decisions, Preference Aggregation, Representative Agents, Revealed Preference|
|JEL(s):||D03, D11, D71, D72, E24|
|Programme Areas:||Public Economics, Industrial Organization, Macroeconomics and Growth|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=13397|
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.