Subjective states: A more robust model
We study the demand for flexibility and what it reveals about subjective uncertainty. As in Kreps [D. Kreps, 1979. A representation theorem for 'preference for flexibility'. Econometrica 47, 565-577], Nehring [K. Nehring, 1996. Preference for flexibility and freedom of choice in a Savage framework. UC Davis Working Paper; K. Nehring, 1999. Preference for flexibility in a Savage framework. Econometrica 67, 101-119] and Dekel et al. [E. Dekel, B. Lipman, A. Rustichini, 2001. Representing preferences with a unique subjective state space. Econometrica 69, 891-934], the latter is represented by a subjective state space consisting of possible future preferences over actions to be chosen ex post. One contribution is to provide axiomatic foundations for a range of alternative hypotheses about the nature of these ex post preferences. Secondly, we establish a sense in which the subjective state space is uniquely pinned down by the ex ante ranking of (random) menus. Finally, we demonstrate the tractability of our representation by showing that it can model the two comparative notions "2 desires more flexibility than 1" and "2 is more averse to flexibility-risk than is 1."
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Epstein, Larry G. & Marinacci, Massimo & Seo, Kyoungwon, 2007. "Coarse contingencies and ambiguity," Theoretical Economics, Econometric Society, vol. 2(4), December.
- Epstein, Larry G. & Peters, Michael, 1999.
"A Revelation Principle for Competing Mechanisms,"
Journal of Economic Theory,
Elsevier, vol. 88(1), pages 119-160, September.
- Klaus Nehring, 2003.
"Preference for Flexibility and Freedom of Choice in a Savage Framework,"
9615, University of California, Davis, Department of Economics.
- Klaus Nehring, . "Preference For Flexibility And Freedom Of Choice In A Savage Framework," Department of Economics 96-15, California Davis - Department of Economics.
- Chew, Soo Hong, 1983. "A Generalization of the Quasilinear Mean with Applications to the Measurement of Income Inequality and Decision Theory Resolving the Allais Paradox," Econometrica, Econometric Society, vol. 51(4), pages 1065-92, July.
- Dekel, Eddie & Lipman, Barton L & Rustichini, Aldo, 2001.
"Representing Preferences with a Unique Subjective State Space,"
Econometric Society, vol. 69(4), pages 891-934, July.
- Eddie Dekel, 1997. "A Unique Subjective State Space for Unforeseen Contingencies," Discussion Papers 1202, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Grandmont, Jean-Michel, 1972. "Continuity properties of a von Neumann-Morgenstern utility," Journal of Economic Theory, Elsevier, vol. 4(1), pages 45-57, February.
- Klaus Nehring, 1999. "Preference for Flexibility in a Savage Framework," Econometrica, Econometric Society, vol. 67(1), pages 101-120, January.
When requesting a correction, please mention this item's handle: RePEc:eee:gamebe:v:67:y:2009:i:2:p:408-427. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.