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Partially rational preferences under ambiguity

Author

Listed:
  • Kensei Nakamura
  • Shohei Yanagita

Abstract

Completeness and transitivity are standard rationality conditions in economics. However, under ambiguity, decision makers sometimes violate these requirements because of the difficulty of forming accurate predictions about ambiguous events. Motivated by this, we study various ambiguity preferences that partially satisfy completeness and transitivity. Our characterization results show that completeness and a novel yet natural weakening of transitivity correspond to two opposite ways of using multiple probability distributions in mind; that is, these two axioms have dual implications at the level of cognitive processes for ambiguity.

Suggested Citation

  • Kensei Nakamura & Shohei Yanagita, 2025. "Partially rational preferences under ambiguity," Papers 2509.11660, arXiv.org.
    • Handle: RePEc:arx:papers:2509.11660
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    File URL: http://arxiv.org/pdf/2509.11660
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    References listed on IDEAS

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    1. Bardier, Pierre & Dong-Xuan, Bach & Nguyen, Van-Quy, 2025. "Hoping for the best while preparing for the worst in the face of uncertainty: a new type of incomplete preferences," Center for Mathematical Economics Working Papers 701, Center for Mathematical Economics, Bielefeld University.
    2. Pierre Bardier & Bach Dong-Xuan & Van-Quy Nguyen, 2024. "Hoping for the best while preparing for the worst in the face of uncertainty: a new type of incomplete preferences," Papers 2406.11166, arXiv.org, revised Jul 2025.
    3. Nascimento, Leandro & Riella, Gil, 2011. "A class of incomplete and ambiguity averse preferences," Journal of Economic Theory, Elsevier, vol. 146(2), pages 728-750, March.
    4. Efe A. Ok & Pietro Ortoleva & Gil Riella, 2012. "Incomplete Preferences Under Uncertainty: Indecisiveness in Beliefs versus Tastes," Econometrica, Econometric Society, vol. 80(4), pages 1791-1808, July.
    5. Pierre Bardier & Bach Dong-Xuan & Van-Quy Nguyen, 2025. "Hoping for the best while preparing for the worst in the face of uncertainty: a new type of incomplete preferences," PSE Working Papers halshs-04615290, HAL.
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