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Choice theory when agents can randomize

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  • Stoye, Jörg

Abstract

This paper takes choice theory to risk or uncertainty. Well-known decision models are axiomatized under the premise that agents can randomize. Under a reversal of order assumption, this convexifies choice sets, and even after imposing the weak axiom of revealed preference and nonemptiness of choice correspondences, the preferences directly revealed by choice may be incomplete or cyclical.

Suggested Citation

  • Stoye, Jörg, 2015. "Choice theory when agents can randomize," Journal of Economic Theory, Elsevier, vol. 155(C), pages 131-151.
  • Handle: RePEc:eee:jetheo:v:155:y:2015:i:c:p:131-151 DOI: 10.1016/j.jet.2014.11.011
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:gamebe:v:104:y:2017:i:c:p:666-673 is not listed on IDEAS
    2. Gerasimou, Georgios, 2015. "Indecisiveness, Undesirability and Overload Revealed Through Rational Choice Deferral," MPRA Paper 67290, University Library of Munich, Germany.

    More about this item

    Keywords

    Revealed preference; Choice functions; Completeness; Transitivity; Expected utility; Maxmin expected utility;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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