Utilitarian Aggregation with Heterogeneous Beliefs

Abstract

The utilitarian aggregation rule requires social utility and beliefs to be a convex combination of individual utilities and beliefs, respectively. Since, in the case of belief heterogeneity, the standard Pareto condition is incompatible with such a separate aggregation, a new condition, called the belief-proof Pareto condition, is proposed to alleviate occurrences of spurious agreement by restricting unanimity to beliefs that can be considered reasonable by society. Then, we show, in the Anscombe-Aumann and the Savage framework, that the belief-proof Pareto condition is equivalent to separate aggregation of individual beliefs and tastes. (JEL D11, D71, D83)