25.5 Suppose there are two individuals in an economy. Utilities of those individuals under five possible social states are shown in the following table:

State Utility 1 Utility 2 A 50 50 B 70 40 C 45 54 D 53 50.5 E 30 84 Individuals do not know which number (1 or 2) they will be assigned when the economy begins operating, hence they are uncertain about the actual utility they will receive under the alternative social states. Which social state will be preferred if an individual adopts the following strategies in his or her voting behavior to deal with this uncertainty?

a. Choose that state which ensures the highest utility to the least well-off person.

b. Assume there is a 50–50 chance of being either individual and choose that state with the highest expected utility.

c. Assume that no matter what, the odds are always unfavorable such that there is a 60 percent chance of having the lower utility and a 40 percent chance of higher utility in any social state. Choose the state with the highest expected utility given these probabilities.

d. Assume there is a 50–50 chance of being assigned either number and that each individual dislikes inequality. Each will choose that state for which expected utility
U1 U2

is as large as possible (where the  ...  notation denotes absolute value).

e. What do you conclude from this problem about social choices under a “veil of ignorance” as to an individual’s specific identity in society?