Smooth Aggregation of Bayesian Agents

Abstract

I study the ex-ante aggregation of preferences of Bayesian agents in a purely subjective framework. Unlike Gilboa et al. (2004), I relax the assumption of Bayesian society while keeping the Pareto condition. Under a simple axiom that relates society’s preference to those of the agents, I obtain an additive separable representation of society’s preference. A strengthening of this axiom leads to a representation that resembles the Smooth Ambiguity Criterion of Klibanoff et al. (2005). I then study the properties of this representation, characterizing when society can be deemed to be ambiguity averse. I then briefly consider applications of this framework to study the Precautionary Principle and treatment choice under ambiguity.