Individual sense of justice and Harsanyi’s impartial observer

Abstract

We revisit, within Harsanyi’s impartial observer setting, the question of foundations underlying procedural fairness concerns in welfare judgments. In our setup—that of allocating an indivisible good using a lottery—such concerns, presumably, matter. We draw from the social preferences literature and relax a typical assumption made while addressing this question, namely that individuals in society do not care about procedural fairness and such concerns arise exclusively at a societal level, which are captured by nonlinear social welfare functions (SWFs). In our model, individual attitudes toward procedural fairness are identified and factored into welfare judgments. Specifically, we provide an axiomatic basis within Harsanyi’s (J Polit Econ 63:309–321, 1955) framework to represent procedural fairness sensitive individual preferences by the representation in Karni and Safra (Econometrica 70:263–284, 2002). We then show, in terms of underlying axioms, how such individual assessments incorporating both risk and procedural fairness attitudes can be aggregated by means of utilitarian and generalized utilitarian SWFs.