Bernoulli, Harsanyi and the Principle of Temporal Good

Abstract

Whether a person’s expectational utility function represents their good cardinally is a fundamental problem in welfare economics and ethics. While expected utility theory defines utility through the consistency of preferences under uncertainty, it does not inherently establish a cardinal metric for well-being. However, Bernoulli’s Hypothesis—the claim that the best prospect is the one that maximizes the expectation of good—can be justified through the formal integration of different contexts of evaluation. Harsanyi’s social aggregation theorem demonstrates that, under the Principle of Personal Good, social utility is the sum of individual utilities. Extending this logic to the intertemporal dimension, the Principle of Temporal Good posits that lifetime good is the aggregate of the good occurring at specific times. If this principle is accepted, the utility functions that represent betterness relations under uncertainty also determine the weight of good across different people and across time. This convergence suggests that the metric of good is determined such that utility represents good cardinally. Consequently, the Principle of Temporal Good implies Bernoulli’s Hypothesis and supports the Utilitarian Principle of Distribution, while the rejection of cardinal utility requires denying that lifetime good is a simple aggregate of dated benefits. – AI-generated abstract.