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Dynamically stable preferences

  • Gumen, Anna
  • Savochkin, Andrei

In the framework of dynamic choice under uncertainty, we define dynamic stability as a combination of two assumptions prevalent in the literature: dynamic consistency and the requirement that updated preferences have the same “structure” as ex ante ones. Dynamic stability also turns out to be a defining characteristic of the multiplier preferences of Hansen and Sargent (2001) [24] within the scope of variational preferences. Generally, for any class of invariant preferences, dynamic stability is shown to be connected to another independent property — consequentialism.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 148 (2013)
Issue (Month): 4 ()
Pages: 1487-1508

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Handle: RePEc:eee:jetheo:v:148:y:2013:i:4:p:1487-1508
DOI: 10.1016/j.jet.2013.04.018
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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  24. Sarin, Rakesh & Wakker, Peter P, 1998. "Dynamic Choice and NonExpected Utility," Journal of Risk and Uncertainty, Springer, vol. 17(2), pages 87-119, November.
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