|Question||Graph 29.4: Social Welfare and Envy
(f) For an equal allocation of utilities when Î± > 0, will resources also be equally allocated? (g) True or False: Envy is rewarded by each of our social indifference maps ?? but increasingly more rewarded as we move from the Rawlsian to the Benthamite extreme.
(h) Can you explain how many might feel discomfort in incorporating such reference-based preferences as a foundation for normative analysis of redistribution?
B: Let x indicate individual 1??s consumption (in dollars) and let y indicate individual 2??s consumption (in dollars). Suppose that individual 1??s utility is given by u1(x, y) = x ??Î±y and individual 2??s utility is given by u2(x, y) = y ??Î²x.
(a) If the overall level of consumption to be divided between these two individuals is I, set up the maximization problem that maximizes individual 2??s utility subject to individual 1 attaining utility u1 and subject to the overall resource constraint.