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Downside-Mindedness

Author

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  • Wilthien, P.-H.

Abstract

The initial goal of this paper was to study how to characterize the behavior of an EU maximiser decision maler according to the sign of u[p], p-th derivative of his utility function. The answer is well-known for u', u'', has been studied for u''' (Menezes, Geiss ant Tressler, Kimball), u'''' (Kimball). In a general case, the answer to this question led us to introduce two categories of properties concerning the preferences of the decision maker. These properties that we call p-order downside-mindedness (increasing or decreasing) consist in a particular attention paid by the decision maker to lower values of prizes (in risk theory) or poorer individuals (in inequality theory). Roughly speaking, a p-downside-increasing-minded (pDIM) decision maker prefers, after a defined process that the lower value concerned be increased. Thus these properties are defined in a very general framework and are not restricted to utilitarian model. However we show that in utilitarian model, the sign of the p-th derivative of utility function is given if and only if the decision maker is p-downside-increasing-minded or p-downside-decreasing-minded for every p=1,2,....

Suggested Citation

  • Wilthien, P.-H., 1999. "Downside-Mindedness," Papiers d'Economie Mathématique et Applications 1999-97, Université Panthéon-Sorbonne (Paris 1).
    • Handle: RePEc:fth:pariem:1999-97
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    Cited by:

    1. Peter Lambert, & Giuseppe Lanza, 2003. "The effect on inequality of changing one or two incomes," IFS Working Papers W03/15, Institute for Fiscal Studies.
    2. Peter Lambert & Giuseppe Lanza, 2006. "The effect on inequality of changing one or two incomes," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(3), pages 253-277, December.

    More about this item

    Keywords

    INCOME ; EQUITY ; DISTRIBUTION ; RISK;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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