Econometrica: Mar 1980, Volume 48, Issue 2

Aggregate Expected Consumer Surplus as a Welfare Index with an Application to Price Stabilization

https://doi.org/0012-9682(198003)48:2<423:AECSAA>2.0.CO;2-S
p. 423-436

William P. Rogerson

This paper presents necessary and sufficient conditions for the expected value of consumer surplus to correctly represent a consumer's preferences. A theorem characterizing utility functions which represent preferences over conditional probabilities is used to derive this. An application to price stabilization policy is presented.
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