Preferences With Grades of Indecisiveness
AbstractDeparting from the traditional approach to modeling an agent who finds it difficult to make clear-cut comparisons between alternatives, we introduce the notion of graded preferences: Given two alternatives, the agent reports a number between 0 and 1, which reflects her inclination to prefer the first option over the second or, put differently, how confident she is about the superiority of the first one. In the classical framework of uncertainty, we derive a representation of a graded preference by a measure of the set of beliefs that rank one option better than the other. Our model is a refinement of Bewley’s (1986) model of Knightian uncertainty: It is based on the same object of representation — the set of beliefs — but provides more information about how the agent compares alternatives. We also define and characterize, in terms of the representation, the notion of one agent being “more decisive” than another.
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Bibliographic InfoPaper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number 309.
Length: 42 pages
Date of creation: 2013
Date of revision:
incomplete preferences; Knightian uncertainty; graded preferences; confidence; decisiveness;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-16 (All new papers)
- NEP-MIC-2013-11-16 (Microeconomics)
- NEP-UPT-2013-11-16 (Utility Models & Prospect Theory)
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