When is it (im)possible to respect all individuals' preferences under uncertainty?

TL;DR

This paper investigates the conditions under which it is possible or impossible to respect all individuals' preferences when preferences are uncertain and incomplete, revealing that common beliefs are crucial for avoiding impossibility.

Contribution

It extends the analysis of preference aggregation under uncertainty to incomplete preferences with ambiguity perceptions, highlighting the necessity of shared beliefs for collective consistency.

Findings

Impossibility arises unless all individuals agree on the most plausible belief.

Even slight differences in ambiguity perceptions prevent respecting all preferences.

Shared beliefs about the most plausible distribution are essential for preference aggregation.

Abstract

When aggregating Subjective Expected Utility preferences, the Pareto principle leads to an impossibility result unless the individuals have a common belief. This paper examines the source of this impossibility in more detail by considering the aggregation of a general class of incomplete preferences that can represent gradual ambiguity perceptions. Our result shows that the planner cannot avoid ignoring some individuals unless there is a probability distribution that all individuals agree is most plausible. This means that even if individuals have similar ambiguity perceptions, the impossibility persists as long as some individual's most plausible belief differs even slightly from that of others.