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Preference for flexibility and dynamic consistency with incomplete preferences

Author

Listed:
  • Fernanda Senra de Moura

    (University College London)

  • Gil Riella

    (Getulio Vargas Foundation)

Abstract

We generalize a previous result about dynamically consistent menu preferences to the case where preferences are not necessarily complete. We show that, as it is the case when preferences are complete, a subjective state space version of dynamic consistency is linked to a comparative theory of preference for flexibility. In words, an objective signal is interpreted as an event in the agent’s subjective state space and the agent acts in a dynamically consistent way after that if and only if we can attribute all the differences between the agent’s preferences before and after the signal to the fact that the agent values flexibility more before the signal than after.

Suggested Citation

  • Fernanda Senra de Moura & Gil Riella, 2021. "Preference for flexibility and dynamic consistency with incomplete preferences," Theory and Decision, Springer, vol. 90(2), pages 171-181, March.
    • Handle: RePEc:kap:theord:v:90:y:2021:i:2:d:10.1007_s11238-020-09776-y
    DOI: 10.1007/s11238-020-09776-y
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    References listed on IDEAS

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    10. Eddie Dekel & Barton L Lipman & Aldo Rustichini & Todd Sarver, 2007. "Representing Preferences with a Unique Subjective State Space: A Corrigendum -super-1," Econometrica, Econometric Society, vol. 75(2), pages 591-600, March.
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