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Regret aversion and opportunity dependence

Listed author(s):
  • Hayashi, Takashi
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    This paper provides an axiomatic model of decision making under uncertainty in which the decision maker is driven by anticipated ex post regrets. Our model allows both regret aversion and likelihood judgement over states to coexist. Also, we characterize two special cases, minimax regret with multiple priors that generalizes Savage's minimax regret, and a smooth model of regret aversion.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0022-0531(07)00086-5
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    Article provided by Elsevier in its journal Journal of Economic Theory.

    Volume (Year): 139 (2008)
    Issue (Month): 1 (March)
    Pages: 242-268

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    Handle: RePEc:eee:jetheo:v:139:y:2008:i:1:p:242-268
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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    1. Chamberlain, Gary, 2000. "Econometrics and decision theory," Journal of Econometrics, Elsevier, vol. 95(2), pages 255-283, April.
    2. Ghirardato, Paolo & Marinacci, Massimo, 2002. "Ambiguity Made Precise: A Comparative Foundation," Journal of Economic Theory, Elsevier, vol. 102(2), pages 251-289, February.
    3. Dirk Bergemann & Karl Schlag, 2005. "Robust Monopoly Pricing: The Case of Regret," Economics Working Papers ECO2005/10, European University Institute.
    4. Fishburn, P. C., 1984. "Dominance in SSB utility theory," Journal of Economic Theory, Elsevier, vol. 34(1), pages 130-148, October.
    5. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    6. Loomes, Graham & Sugden, Robert, 1982. "Regret Theory: An Alternative Theory of Rational Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 92(368), pages 805-824, December.
    7. Manski, Charles F., 2000. "Identification problems and decisions under ambiguity: Empirical analysis of treatment response and normative analysis of treatment choice," Journal of Econometrics, Elsevier, vol. 95(2), pages 415-442, April.
    8. Gilboa, Itzhak & Schmeidler, David, 1989. "Maxmin expected utility with non-unique prior," Journal of Mathematical Economics, Elsevier, vol. 18(2), pages 141-153, April.
    9. Linhart, P. B. & Radner, R., 1989. "Minimax-regret strategies for bargaining over several variables," Journal of Economic Theory, Elsevier, vol. 48(1), pages 152-178, June.
    10. Grandmont, Jean-Michel, 1972. "Continuity properties of a von Neumann-Morgenstern utility," Journal of Economic Theory, Elsevier, vol. 4(1), pages 45-57, February.
    11. Larry G. Epstein, 1999. "A Definition of Uncertainty Aversion," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 579-608.
    12. Amartya K. Sen, 1971. "Choice Functions and Revealed Preference," Review of Economic Studies, Oxford University Press, vol. 38(3), pages 307-317.
    13. Myerson, Roger B, 1981. "Utilitarianism, Egalitarianism, and the Timing Effect in Social Choice Problems," Econometrica, Econometric Society, vol. 49(4), pages 883-897, June.
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