Parametric representation of preferences
AbstractA preference is invariant with respect to a set of transformations if the ranking of acts is unaffected by reshuffling the states under these transformations. For example, transformations may correspond to the set of finite permutations, or the shift in a dynamic choice model. Our main result is that any invariant preference must be parametric: there is a unique sufficient set of parameters such that the preference ranks acts according to their expected utility given the parameters. Parameters are characterized in terms of objective frequencies, and can thus be interpreted as objective probabilities. By contrast, uncertainty about parameters is subjective. The preferences for which the above results hold are only required to be reflexive, transitive, monotone, continuous, and mixture linear.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Theory.
Volume (Year): 150 (2014)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/inca/622869
Decision making; Uncertainty; Parameters;
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- A1 - General Economics and Teaching - - General Economics
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