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A Theory Of Rational Choice Under Complete Ignorance


  • Klaus Nehring


This paper contributes to a theory of rational choice under uncertainty for decision-makers whose preferences are exhaustively described by partial orders representing "limited information." Specifically, we consider the limiting case of "Complete Ignorance" decision problems characterized by maximally incomplete preferences and important primarily as reduced forms of general decision problems under uncertainty. "Rationality" is conceptualized in terms of a "Principle of Preference-Basedness," according to which rational choice should be isomorphic to asserted preference. The main result characterizes axiomatically a new choice-rule called "Simultaneous Expected Utility Maximization" which in particular satisfies a choice-functional independence and a context-dependent choice-consistency condition; it can be interpreted as the fair agreement in a bargaining game (Kalai-Smorodinsky solution) whose players correspond to the different possible states (respectively extermal priors in the general case).

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  • Klaus Nehring, "undated". "A Theory Of Rational Choice Under Complete Ignorance," Department of Economics 97-02, California Davis - Department of Economics.
  • Handle: RePEc:fth:caldec:97-02

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    References listed on IDEAS

    1. Blau, David M, 1998. "Labor Force Dynamics of Older Married Couples," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 595-629, July.
    2. Jonathan Gruber, 1999. "Social Security and Retirement in Canada," NBER Chapters,in: Social Security and Retirement around the World, pages 73-99 National Bureau of Economic Research, Inc.
    3. Michael D. Hurd, 1990. "The Joint Retirement Decision of Husbands and Wives," NBER Chapters,in: Issues in the Economics of Aging, pages 231-258 National Bureau of Economic Research, Inc.
    4. Pozzebon, Silvana & Mitchell, Olivia S, 1989. "Married Women's Retirement Behavior," Journal of Population Economics, Springer;European Society for Population Economics, vol. 2(1), pages 39-53.
    5. Baker, Michael & Benjamin, Dwayne, 1999. "How do retirement tests affect the labour supply of older men?," Journal of Public Economics, Elsevier, vol. 71(1), pages 27-51, January.
    6. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    7. Baker, Michael & Benjamin, Dwayne, 1999. "Early Retirement Provisions and the Labor Force Behavior of Older Men: Evidence from Canada," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 724-756, October.
    8. Blau, David M., 1997. "Social security and the labor supply of older married couples," Labour Economics, Elsevier, vol. 4(4), pages 373-418, December.
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