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Justifiable preferences

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Author Info

  • Lehrer, Ehud
  • Teper, Roee

Abstract

We characterize preferences over acts that can be represented by a utility function and a multiple-prior, such that an act f is preferred to act g if there is a prior under which the expected utility induced by f is higher than that induced by g. These preferences are referred to as justifiable preferences. We further introduce a generalized model of ambiguity that involves a collection of multiple-priors, namely, multiple multiple-priors and incorporate Bewley[modifier letter apostrophe]s Knightian model in justifiability: f is preferred to g if, according to at least one set of priors, f is unanimously preferred to g.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 146 (2011)
Issue (Month): 2 (March)
Pages: 762-774

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Handle: RePEc:eee:jetheo:v:146:y:2011:i:2:p:762-774

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Web page: http://www.elsevier.com/locate/inca/622869

Related research

Keywords: Justifiable preferences Multiple-prior Multiple multiple-prior;

References

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  1. Sujoy Mukerji & Peter Klibanoff, 2002. "A Smooth Model of Decision,Making Under Ambiguity," Economics Series Working Papers 113, University of Oxford, Department of Economics.
  2. Fabio Maccheroni & Massimo Marinacci & Aldo Rustichini, 2006. "Ambiguity Aversion, Robustness, and the Variational Representation of Preferences," Econometrica, Econometric Society, vol. 74(6), pages 1447-1498, November.
  3. Kalai, Ehud & Lehrer, Ehud, 1991. "Rational Learning Leads to Nash Equilibrium," Working Papers 91-18, C.V. Starr Center for Applied Economics, New York University.
  4. Juan Dubra & Fabio Maacheroni & Efe A. Ok, 2001. "Expected Utility Theory without the Completeness Axiom," Cowles Foundation Discussion Papers 1294, Cowles Foundation for Research in Economics, Yale University.
  5. Gil Kalai & Ariel Rubinstein & Ran Spiegler, 2001. "Rationalizing Choice Functions by Multiple Rationales," Discussion Paper Series dp278, The Center for the Study of Rationality, Hebrew University, Jerusalem.
  6. Fudenberg, Drew & Levine, David K, 1993. "Self-Confirming Equilibrium," Econometrica, Econometric Society, vol. 61(3), pages 523-45, May.
  7. Itzhak Gilboa & Fabio Maccheroni & Massimo Marinacci & David Schmeidler, 2010. "Objective and Subjective Rationality in a Multiple Prior Model," Econometrica, Econometric Society, vol. 78(2), pages 755-770, 03.
  8. R. J. Aumann & J. H. Dreze, 2009. "Assessing Strategic Risk," American Economic Journal: Microeconomics, American Economic Association, vol. 1(1), pages 1-16, February.
  9. Kalai, Ehud & Lehrer, Ehud, 1993. "Subjective Equilibrium in Repeated Games," Econometrica, Econometric Society, vol. 61(5), pages 1231-40, September.
  10. Daniel Ellsberg, 2000. "Risk, Ambiguity and the Savage Axioms," Levine's Working Paper Archive 7605, David K. Levine.
  11. Nygren, Thomas E. & Isen, Alice M. & Taylor, Pamela J. & Dulin, Jessica, 1996. "The Influence of Positive Affect on the Decision Rule in Risk Situations: Focus on Outcome (and Especially Avoidance of Loss) Rather Than Probability," Organizational Behavior and Human Decision Processes, Elsevier, vol. 66(1), pages 59-72, April.
  12. Wright, William F. & Bower, Gordon H., 1992. "Mood effects on subjective probability assessment," Organizational Behavior and Human Decision Processes, Elsevier, vol. 52(2), pages 276-291, July.
  13. Ghirardato, Paolo & Maccheroni, Fabio & Marinacci, Massimo, 2004. "Differentiating ambiguity and ambiguity attitude," Journal of Economic Theory, Elsevier, vol. 118(2), pages 133-173, October.
  14. F J Anscombe & R J Aumann, 2000. "A Definition of Subjective Probability," Levine's Working Paper Archive 7591, David K. Levine.
  15. Gilboa, Itzhak & Schmeidler, David, 1989. "Maxmin expected utility with non-unique prior," Journal of Mathematical Economics, Elsevier, vol. 18(2), pages 141-153, April.
  16. Drew Fudenberg & David K. Levine, 1998. "The Theory of Learning in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061945.
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Citations

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Cited by:
  1. Pierpaolo Battigalli & Simone Cerreia-Vioglio & Fabio Maccheroni & Massimo Marinacci, 2012. "Analysis of Information Feedback and Selfconfirming Equilibrium," Working Papers 459, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  2. Pierpaolo Battigalli & Simone Cerreia-Vioglio & Fabio Maccheroni & Massimo Marinacci, 2011. "Selfconfirming Equilibrium and Uncertainty," Working Papers 428, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  3. Faro, José Heleno, 2011. "Variational Bewley Preferences," Ibmec Working Papers wpe_258, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
  4. Sandroni, Alvaro & Cherepavov, Vadim & Feddersen, Timothy, 0. "Rationalization," Theoretical Economics, Econometric Society.
  5. P Battigalli & S Cerreia-Vioglio & F Maccheroni & M Marinacci, 2012. "Selfconfirming Equilibrium and Model Uncertainty," Levine's Working Paper Archive 786969000000000376, David K. Levine.

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