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Preference for flexibility and the opportunities of choice

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  • Barberà, Salvador
  • Grodal, Birgit

Abstract

A decision-maker exhibits preference for flexibility if he always prefers any set of alternatives to its subsets, even when two of them contain the same best element. Desire for flexibility can be explained as the consequence of the agent’s uncertainty along a two-stage process, where he must first preselect a subset of alternatives from which to make a final choice later on. We investigate conditions on the rankings of subsets that are compatible with the following assumptions: (1) the agent is endowed with a VN-M utility function on alternatives, (2) the agent attaches a subjective probability to the survival of each subset of alternatives, and (3) the agent will make a best choice out of any set which becomes available, and ranks sets ex-ante in terms of the expected utility of the best surviving alternatives within them.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Mathematical Economics.

Volume (Year): 47 (2011)
Issue (Month): 3 ()
Pages: 272-278

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Handle: RePEc:eee:mateco:v:47:y:2011:i:3:p:272-278

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Web page: http://www.elsevier.com/locate/jmateco

Related research

Keywords: Flexibility; Preferences; Uncertainity;

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References

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  1. Sen, Amartya, 1988. "Freedom of choice : Concept and content," European Economic Review, Elsevier, Elsevier, vol. 32(2-3), pages 269-294, March.
  2. Sen, Amartya, 1991. "Welfare, preference and freedom," Journal of Econometrics, Elsevier, Elsevier, vol. 50(1-2), pages 15-29, October.
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Cited by:
  1. Manzini, Paola & Mariotti, Marco, 2013. "Imperfect Attention and Menu Evaluations," SIRE Discussion Papers, Scottish Institute for Research in Economics (SIRE) 2013-98, Scottish Institute for Research in Economics (SIRE).
  2. Matthew Ryan, 2014. "Belief functions and preference for flexibility," Economics Bulletin, AccessEcon, vol. 34(1), pages 581-588.
  3. Casari, Marco, 2006. "Pre-Commitment and Flexibility in a Time Decision Experiment," Purdue University Economics Working Papers 1183, Purdue University, Department of Economics.
  4. Bleichrodt, Han & Quiggin, John, 2013. "Capabilities as menus: A non-welfarist basis for QALY evaluation," Journal of Health Economics, Elsevier, Elsevier, vol. 32(1), pages 128-137.

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