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Purely subjective variational preferences

Listed author(s):
  • Craig S. Webb

    ()

    (The University of Manchester)

Abstract Variational preferences (Maccheroni et al. in Econometrica 74:1447–1498, 2006) are an important class of ambiguity averse preferences, compatible with Ellsberg-type phenomena. In this paper, a new foundation for variational preferences is derived in a framework of two stages of purely subjective uncertainty. A similar foundation is obtained for purely subjective maxmin expected utility (Gilboa and Schmeidler in J Math Econ 18:141–153, 1989). By establishing their axiomatic foundations without the use of extraneous probabilities, the conceptual appeal and applicability of these ambiguity models is enhanced.

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File URL: http://link.springer.com/10.1007/s00199-016-1003-2
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Article provided by Springer & Society for the Advancement of Economic Theory (SAET) in its journal Economic Theory.

Volume (Year): 64 (2017)
Issue (Month): 1 (June)
Pages: 121-137

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Handle: RePEc:spr:joecth:v:64:y:2017:i:1:d:10.1007_s00199-016-1003-2
DOI: 10.1007/s00199-016-1003-2
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