Uncertainty Aversion and Dynamic Consistency
AbstractThis paper applies a proposal of M. Machina (1989) for updating nonexpected utility preferences to D. Schmeidler's (1989) nonadditive probability model. The authors discover that the updated preferences may not themselves satisfy Schmeidler's axioms. Despite this, the updates of uncertainty averse preferences are themselves uncertainty averse. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
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Bibliographic InfoPaper provided by Department of Economics, University of Birmingham in its series Discussion Papers with number 93-08.
Length: 26 pages
Date of creation: 1993
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