Development and Underdevelopment in the History of Economic Thought

Bayesian Rationality, Equiprobability, and Rule Utilitarianism as a Cooperative Game: A History of John C. Harsanyi’s Ethics and its Analytical Foundations

Molavi Vasséi Arash, Turkish-German University/University of Hohenheim

John C. Harsanyi’s contributions to welfare economics and, more generally, to moral philosophy or “ethics” are widely acknowledged as one of the great intellectual achievements of the twentieth century. My paper discusses Harsanyi’s famous utilitarian theorem, namely, that there exists a set of social welfare functions - one for each moral agent - in form of the weighted arithmetic average of all individual utility functions, if all personal and moral preferences are Bayesian rational, and if moral preferences satisfy the weak Pareto property. If, in addition, Harsanyi’s equiprobability property is satisfied, which is closely related to Rawls “veil of ignorance”, the social welfare function is purely utilitarian. Specifically, the paper highlights (1) the tight but intricate relationship between the equiprobability property and common priors in Bayesian games with incomplete information, (2) how Harsanyi avoided the impossibility results associated with the aggregation over Bayesian agents, especially the impossibility of achieving a social welfare function satisfying the weak Pareto property in case of Bayesian rational preferences, (3) the significance of cardinal utility as implied by the von Neumann-Morgenstern axioms and the peculiar role of interpersonal utility comparisons in Harsanyi’s ethics, and (4) the evolution of his thought as witnessed by his shift from act to rule utilitarianism, and how this shift is mirrored by the substitution of cooperative games for noncooperative ones as the foundation for his utilitarian ethics. Finally, in the light of these results, Harsanyi’s contribution to ethics as well as its critical reception are evaluated, with a special focus on the issues raised by John Rawls and Amartya Sen.


Keywords: Harsanyi, ethics, rule utilitarianism, Bayesian rationality, equiprobability, social welfare function, aggregation, Savage, von Neumann Morgenstern, cardinal utility