Utility functions often lack additive separability, presenting an obstacle for decision theoretic axiomatizations. We address this challenge by providing a representation theorem for utility functions of quasi-separable preferences of the form u(x,y,z)=f(x,z) + g(y,z) on subsets of topological product spaces. These functions are additively separable only when holding z fixed but are cardinally comparable for different values of z. We then generalize the result to spaces with more than three dimensions and provide applications to belief elicitation, inequity aversion, intertemporal choice, and rank-dependent utility.
Forthcoming at Theory and Decision.
We characterize additive representations on subsets of product spaces with an empty interior such as simplexes and certain homeomorphisms thereof. Previously, all additive representation theorems only applied to spaces in which any coordinate can be changed without changing any of the other coordinates. We identify a novel preference condition that is necessary and sufficient for the existence of additive representations. Our results provide, for instance, a characterization of utilitarianism on the Pareto frontier of a cake division problem.
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This paper analyzes the occurrence of the group-size paradox in situations in which groups compete for rents, allowing for degrees of rivalry of the rent among group members. We provide two intuitive criteria for the group-impact function which for groups with within-group symmetric valuations of the rent determine whether there are advantages or disadvantages for larger groups: social-interactions effects and returns to scale. For groups with within-group asymmetric valuations, the complementarity of group members’ efforts and the composition of valuations are shown to play a role as further factors.
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This paper starts from the observation that in public-goods group contests, group impact can in general not be additively decomposed into some sum (of functions) of individual efforts. We use a CES-impact function to identify the main channels of influence of the elasticity of substitution on the behavior in and the outcome of such a contest. We characterize the Nash equilibria of this game and carry out comparative-static exercises with respect to the elasticity of substitution among group members’ efforts. If groups are homogeneous (i.e. all group members have the same valuation and efficiency within the group), the elasticity of substitution has no effect on the equilibrium. For heterogeneous groups, the higher the complementarity of efforts of that group, the lower the divergence of efforts among group members and the lower the winning probability of that group. This contradicts the common intuition that groups can improve their performance by solving the free-rider problem via higher degrees of complementarity of efforts.
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