Nonrepresentative representative consumers

摘要: Single consumer models are often used to focus attention on economic efficiency, leaving aside equity considerations. In general, these i°representative consumer" do not accurately portray the effects of changes in policies, endowments or technology multi-consumer economies they meant represent; but even when do, necessarily adequate for evaluating efficiency. The representative can be Pareto inconsistent, preferring a situation B A though all consumers represented economy prefer B. It is clear from literature how serious defect this be. known examples inconsistency robust. Small consumers' preferences remove inconsistency. has been an open question whether large robust inconsistencies possible. This paper shows that are. one example, actual require 56% more income than requires order compensated doubling price. But such there Giffen good consumer. We argue most macroeconomic applications likely small and we give conditions ruling out entirely.