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Updating Choquet Beliefs

Author

Listed:
  • Jurgen Eichberger

    (Alfred Weber Institut, Universitat Heidelberg)

  • Simon Grant

    (Rice University, Texas and Australian National University)

  • David Kelsey

    (Department of Economics, University of Exeter)

Abstract

We apply Pires’s coherence property between unconditional and conditional preferences that admit a CEU representation. In conjunction with consequentialism (only those outcomes on states which are still possible can matter for conditional preference) this implies that the conditional preference may be obtained from the unconditional preference by taking the Full Bayesian Update of the capacity. Attitudes towards sequential versus simultaneous resolution of uncertainty for a simple bet are analyzed. We show that for a class of recursive CEU preferences which exhibit both optimism and pessimism, a 'good-news' signal is preferred to no signal which is preferred to a 'bad-news' signal.

Suggested Citation

  • Jurgen Eichberger & Simon Grant & David Kelsey, 2006. "Updating Choquet Beliefs," Discussion Papers 0607, University of Exeter, Department of Economics.
    • Handle: RePEc:exe:wpaper:0607
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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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