Ordinal, nonlinear context dependence
Prospect theory [KT79] and its more recent formalizations [KR06, KR07] prescribe "nonlinear" reference-dependence. The same may be said of other forms of context-dependence such as status quo bias [MO05]. Even in settings where there is a strong case for linear context-dependence such as Gilboa and Schmeidler's theory of case-based decisions, nonlinearity is typical in the absence of "diversity of preference". Furthermore, the hope of providing an axiomatic foundation for neuroscientific models of decision making, where context is interpreted as a physical state or "connectome" suggest a general, ordinal axiomatization of nonlinear context-dependence is called for. As with traditional, "context-free" models of ordinal utility (eg. Debreu [Deb54]), the issue of continuity is central: precise, yet simple and intuitive, conditions on the set of contexts are needed if preferences have a representation that is continuous across contexts. The continuity condition I employ is the obvious choice and is a generalisation of [GS03a]. There are interesting connections with literature on jointly continuous utility [Lev83, CCM09]. Finally, a promising feature of the present approach is it that may be used to axiomatise payoffs associated with discontinuous games (such as Bertrand oligopoly).
|Date of creation:||18 May 2013|
|Date of revision:|
|Contact details of provider:|| Postal: St. Lucia, Qld. 4072|
Phone: +61 7 3365 6570
Fax: +61 7 3365 7299
Web page: http://www.uq.edu.au/economics/index.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gilboa,Itzhak & Schmeidler,David, 2001.
"A Theory of Case-Based Decisions,"
Cambridge University Press, number 9780521802345, December.
- Gilboa, I. & Schmeidler, D., 1999.
"Inductive Inference: an Axiomatic Approach,"
29-99, Tel Aviv.
- Itzhak Gilboa & David Schmeidler, 2003. "Inductive Inference: An Axiomatic Approach," Post-Print hal-00481297, HAL.
- Gilboa, I. & Schmeidler, D., 2001. "Inductive Inference: An Axiomatic Approach," Papers 2001-19, Tel Aviv.
- Itzhak Gilboa & David Schmeidler, 2001. "Inductive Inference: An Axiomatic Approach," Cowles Foundation Discussion Papers 1339, Cowles Foundation for Research in Economics, Yale University.
- Itzhak Gilboa & David Schmeidler, 2002. "Inductive Inference: An Axiomatic Approach," NajEcon Working Paper Reviews 391749000000000544, www.najecon.org.
- Itzhak Gilboa & David Schmeidler, 2002. "Inductive Inference: An Axiomatic Approach," Levine's Working Paper Archive 391749000000000544, David K. Levine.
- Botond Koszegi & Matthew Rabin, 2007.
"Reference-Dependent Risk Attitudes,"
American Economic Review,
American Economic Association, vol. 97(4), pages 1047-1073, September.
- Koszegi, Botond & Rabin, Matthew, 2004.
"A Model of Reference-Dependent Preferences,"
Department of Economics, Working Paper Series
qt0w82b6nm, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Kahneman, Daniel & Tversky, Amos, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Econometric Society, vol. 47(2), pages 263-91, March.
- Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
- Itzhak Gilboa & David Schmeidler, 2001.
"A Derivation of Expected Utility Maximization in the Context of a Game,"
Cowles Foundation Discussion Papers
1342, Cowles Foundation for Research in Economics, Yale University.
- Gilboa, Itzhak & Schmeidler, David, 2003. "A derivation of expected utility maximization in the context of a game," Games and Economic Behavior, Elsevier, vol. 44(1), pages 172-182, July.
- Gilboa, I. & Schmeidler, D., 2001. "A Derivation of Expected Utility Maximization in the Context of a Game," Papers 2001-18, Tel Aviv.
- Itzhak Gilboa & D. Schmeidler, 2003. "Expected Utility in the Context of a Game," Post-Print hal-00752136, HAL.
- Itzhak Gilboa & David Schmeidler, 1995.
"Case-Based Decision Theory,"
- Barbos, Andrei, 2010. "Context effects: A representation of choices from categories," Journal of Economic Theory, Elsevier, vol. 145(3), pages 1224-1243, May.
When requesting a correction, please mention this item's handle: RePEc:ags:uqsers:152450. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.