DP13397 The Non-Existence of Representative Agents

Author(s):	Matthew O. Jackson, Leeat Yariv
Publication Date:	December 2018
Date Revised:	May 2019
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.