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Updating Choquet beliefs

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  • Eichberger, Jurgen
  • Grant, Simon
  • Kelsey, David

Abstract

We apply Pires’s coherence property between unconditional and conditional preferences that admit a CEU representation. In conjunction with consequentialism (only those outcomes on states which are still possible can matter for conditional preference) this implies that the conditional preference may be obtained from the unconditional preference by taking the Full Bayesian Update of the capacity. Attitudes towards sequential versus simultaneous resolution of uncertainty for a simple bet are analyzed. We show that for a class of recursive CEU preferences which exhibit both optimism and pessimism, a 'good-news' signal is preferred to no signal which is preferred to a 'bad-news' signal.
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Suggested Citation

  • Eichberger, Jurgen & Grant, Simon & Kelsey, David, 2007. "Updating Choquet beliefs," Journal of Mathematical Economics, Elsevier, vol. 43(7-8), pages 888-899, September.
    • Handle: RePEc:eee:mateco:v:43:y:2007:i:7-8:p:888-899
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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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