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Preferences Under Ignorance

Author

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  • Olivier Gossner
  • Christoph Kuzmics

Abstract

A decision maker (DM) makes choices from different sets of alternatives. The DM is initially ignorant of the payoff associated with each alternative and learns these payoffs only after a large number of choices have been made. We show that, in the presence of an outside option, once payoffs are learned, the optimal choice rule from sets of alternatives can be rationalized by a DM with strict preferences over all alternatives. Under this model, the DM has preferences for preferences while being ignorant of what preferences are “right.”

Suggested Citation

  • Olivier Gossner & Christoph Kuzmics, 2019. "Preferences Under Ignorance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(1), pages 241-257, February.
    • Handle: RePEc:wly:iecrev:v:60:y:2019:i:1:p:241-257
    DOI: 10.1111/iere.12351
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    2. Guarino, Pierfrancesco & Ziegler, Gabriel, 2022. "Optimism and pessimism in strategic interactions under ignorance," Games and Economic Behavior, Elsevier, vol. 136(C), pages 559-585.

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    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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