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Planning for the long run: Programming with patient, Pareto responsive preferences

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  • Khan, Urmee
  • Stinchcombe, Maxwell B.

Abstract

Respect for first order distributional overtaking guarantees that social welfare functions for intergenerational problems treat present and future people equally and respect the Pareto criterion, modulo null sets. For weakly ergodic optimization problems, this class of social welfare functions yields solutions that respect welfare concerns, sharply contrasting with extant patient criteria. For problems in which the evolution of future paths hinges on early events and decisions, the curvature of our social welfare functions determines the risks that society is willing to undertake and leads to a variant of the precautionary principle.

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  • Khan, Urmee & Stinchcombe, Maxwell B., 2018. "Planning for the long run: Programming with patient, Pareto responsive preferences," Journal of Economic Theory, Elsevier, vol. 176(C), pages 444-478.
    • Handle: RePEc:eee:jetheo:v:176:y:2018:i:c:p:444-478
    DOI: 10.1016/j.jet.2018.04.001
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    5. Adam Jonsson, 2023. "An axiomatic approach to Markov decision processes," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 97(1), pages 117-133, February.

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    More about this item

    Keywords

    Intergenerational equity; Pareto responsiveness; Long-run optimality in stochastic dynamic problems;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D6 - Microeconomics - - Welfare Economics
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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