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Dynamically consistent CEU preferences on f-convex events

  • Lapied, André
  • Toquebeuf, Pascal

We give an axiomatic foundation to the updating rule proposed by Sarin and Wakker [Sarin, R., Wakker, P.P., 1998a. Revealed likelihood and knightian uncertainty. Journal of Risk and Uncertainty 16, 223–250] for CEU preferences. This rule is dynamically consistent but non-consequentialist, since forgone consequences are relevant for conditioning. Whereas it does not work universally, but only when counterfactuals outcomes are better and/or worse than the ones resulting on the conditioning event, the rule has many interesting features, since it is able to describe Ellsberg-type preferences together with a recursive structure of the criterion.

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Article provided by Elsevier in its journal Mathematical Social Sciences.

Volume (Year): 63 (2012)
Issue (Month): 3 ()
Pages: 252-256

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Handle: RePEc:eee:matsoc:v:63:y:2012:i:3:p:252-256
DOI: 10.1016/j.mathsocsci.2012.03.001
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505565

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  18. André Lapied & Pascal Toquebeuf, 2010. "Atemporal non-expected utility preferences, dynamic consistency and consequentialism," Economics Bulletin, AccessEcon, vol. 30(2), pages 1661-1669.
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