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Adequate Moods for Non-EU Decision Making in a Sequential Framework

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  • Nathalie Etchart(-Vincent)

    ()
    (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - Ecole Nationale du Génie Rural des Eaux et Forêts, GRID - Groupe de Recherche sur le risque, l'Information et la Décision - CNRS : UMR8534 - École normale supérieure [ENS] - Cachan)

Abstract

In a dynamic (sequential) framework, departures from the independence axiom (IND) are reputed to induce violations of dynamic consistency (DC), which may in turn have undesirable normative consequences. This result thus questions the normative acceptability of non expected-utility (non-EU) models, which precisely relax IND. This paper pursues a twofold objective. The main one is to discuss the normative conclusion: we show that usual arguments linking violations of DC to departures from IND are actually based on specific (but usually remaining implicit) assumptions which may rightfully be released, so that it is actually possible for a non-EU maximizer to be dynamically consistent and thus avoid normative difficulties. Our second objective is to introduce a kind of 'reality principle' (through two other evaluation criteria) in order to mitigate the normative requirement when examining adequate moods for non-EU decision making.

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Bibliographic Info

Paper provided by HAL in its series CIRED Working Papers with number halshs-00004832.

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Date of creation: 05 Oct 2005
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Handle: RePEc:hal:ciredw:halshs-00004832

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Keywords: Non-expected utility; sequential choice; dynamic consistency; money pump; consequentialism.;

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