Elath Hall, 2nd floor, Feldman Building, Edmond J. Safra Campus
We Savage's theory to model large populations. Specifically, the notion of aggregative utility capture sensitivity to aggregate uncertainty in a large population. This utility characterizes planners who evaluate lotteries over population profiles according to their expected utility, and whose preferences over deterministic profiles satisfy the Savage postulates. Idiosyncratic risks are ranked separably across the population. On the other hand, aversion to aggregate uncertainty can result in penalizing exposure to correlated risks, to a strict preference for randomization, and to treating ex-ante similar individuals differently.