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Likelihood relations and stochastic preferences

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  • Richter, Marcel K.
  • Wong, Kam-Chau

Abstract

We define the concept of a qualitative, non-numerical relative likelihood relation, to capture the intuition that “it is at least as likely that a is preferred to b, as that c is preferred to d.” We provide necessary and sufficient conditions for this concept to be a basis for the numerical concept of a stochastic preference, which is a numerical probability measure on the set of deterministic preferences.

Suggested Citation

  • Richter, Marcel K. & Wong, Kam-Chau, 2016. "Likelihood relations and stochastic preferences," Journal of Mathematical Economics, Elsevier, vol. 62(C), pages 28-35.
    • Handle: RePEc:eee:mateco:v:62:y:2016:i:c:p:28-35
    DOI: 10.1016/j.jmateco.2015.10.009
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    References listed on IDEAS

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    1. Martin L. Weitzman, 1992. "On Diversity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 363-405.
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    3. Taradas Bandyopadhyay & Indraneel Dasgupta & Prasanta Pattanaik, 2004. "A general revealed preference theorem for stochastic demand behavior," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 23(3), pages 589-599, March.
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    9. Weitzman, M.L., 1992. "Diversity Functions," Harvard Institute of Economic Research Working Papers 1610, Harvard - Institute of Economic Research.
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    Cited by:

    1. Jochen Jungeilges & Tatyana Ryazanova, 2018. "Output volatility and savings in a stochastic Goodwin economy," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 8(3), pages 355-380, December.

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