Flexibility of choice versus reduction of ambiguity
AbstractThis paper explores the problem of a social planner willing to improve the welfare of individuals who are unable to compare all available alternatives. The optimal decision trades off the individuals' desire for flexibility versus their aversion towards ambiguous choice situations. We introduce an axiom system that formalizes this idea. Our main result characterizes the preference maximizing opportunity set. It is a maximal set that consists of mutually comparable alternatives. It also has the property that it maximizes the sum of the distances between its ordered elements for some appropriate metric imposed on the set of possible choices.
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Bibliographic InfoArticle provided by Springer in its journal Social Choice and Welfare.
Volume (Year): 30 (2008)
Issue (Month): 3 (April)
Contact details of provider:
Web page: http://link.springer.de/link/service/journals/00355/index.htm
Other versions of this item:
- Guerdjikova, Ani & Zimper, Alexander, 2006. "Flexibility of Choice versus Reduction of Ambiguity," Working Papers 06-14, Cornell University, Center for Analytic Economics.
- Ani Guerdjikova & Alexander Zimper, 2005. "Flexibility of Choice Versus Reduction of Ambiguity," Working Papers 40, Economic Research Southern Africa.
- D69 - Microeconomics - - Welfare Economics - - - Other
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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