Stability versus rationality in choice functions
AbstractIf we analyze the notion of stability (von Neumann and Morgenstern, 1944) it seems a desirable property to be fulfilled by any choice function. Paradoxically, the usual Condorcet choice functions (maximal set, top cycle, uncovered set, minimal covering, ...) are not stable in the VNM sense. In this study, we show the relationship between stability and rational choice functions, and propose an alternative notion of stability (wich we call c-stability) that solves this incompatibility problem. This new notion is closely related to the admissible set defined in Kalai and Schmeidler (1977).
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Bibliographic InfoPaper provided by Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica in its series QM&ET Working Papers with number 12-5.
Length: 17 pages
Date of creation: 13 Mar 2012
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stable set; admissible set; Condorcet choice function;
Find related papers by JEL classification:
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-21 (All new papers)
- NEP-MIC-2012-03-21 (Microeconomics)
- NEP-UPT-2012-03-21 (Utility Models & Prospect Theory)
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