IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Adequate Moods for non-EU Decision Making in a Sequential Framework

Author Info

Listed author(s):
  • Nathalie Etchart-Vincent

    ()

    (CIRED - Centre International de Recherche sur l'Environnement et le Développement - ENGREF - Ecole Nationale du Génie Rural, des Eaux et des Forêts - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

Abstract

In a dynamic (sequential) framework, departures from the independence axiom (IND) are reputed to induce violations of dynamic consistency (DC), which may in turn have undesirable normative consequences. This result thus questions the normative acceptability of non expected-utility (non-EU) models, which precisely relax IND. This paper pursues a twofold objective. The main one is to discuss the normative conclusion: usual arguments linking violations of DC to departures from IND are shown to be actually based on specific (but usually remaining implicit) assumptions which may rightfully be released, so that it is actually possible for a non-EU maximizer to be dynamically consistent and thus avoid normative difficulties. The second objective is to introduce a kind of 'reality principle' (through two other evaluation criteria) in order to mitigate the normative requirement when examining adequate moods for non-EU decision making.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: https://halshs.archives-ouvertes.fr/halshs-00004830/document
Download Restriction: no

Paper provided by HAL in its series Post-Print with number halshs-00004830.

as
in new window

Length:
Date of creation: 2002
Publication status: Published in Theory and Decision, Springer Verlag, 2002, 52, pp.1-28. <10.1023/A:1015503119317>
Handle: RePEc:hal:journl:halshs-00004830
DOI: 10.1023/A:1015503119317
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00004830
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

Keywords: Sequential Decisions; Decision Trees; Dynamic Consistency; Non Expected Utility; Myopia; Money Pump; Consequentialism; Sophisticated Behaviour; Behavioural Consistency; Resolute Behaviour; choix séquentiels; cohérence dynamique; modèles non-EU;

Other versions of this item:

References listed on IDEAS
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.:

as
in new window


  1. R. A. Pollak, 1968. "Consistent Planning," Review of Economic Studies, Oxford University Press, vol. 35(2), pages 201-208.
  2. Segal, Uzi, 1990. "Two-Stage Lotteries without the Reduction Axiom," Econometrica, Econometric Society, vol. 58(2), pages 349-377, March.
  3. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
  4. Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 392-406, April.
  5. Schlee, Edward, 1990. "The Value of Information in Anticipated Utility Theory," Journal of Risk and Uncertainty, Springer, vol. 3(1), pages 83-92, March.
  6. Machina, Mark J, 1989. "Dynamic Consistency and Non-expected Utility Models of Choice under Uncertainty," Journal of Economic Literature, American Economic Association, vol. 27(4), pages 1622-1668, December.
  7. Geir B. Asheim, 1997. "Individual and Collective Time-Consistency," Review of Economic Studies, Oxford University Press, vol. 64(3), pages 427-443.
  8. Hammond, Peter J, 1989. "Consistent Plans, Consequentialism, and Expected Utility," Econometrica, Econometric Society, vol. 57(6), pages 1445-1449, November.
  9. Bernasconi, Michele, 1994. "Nonlinear Preferences and Two-Stage Lotteries: Theories and Evidence," Economic Journal, Royal Economic Society, vol. 104(422), pages 54-70, January.
  10. Border Kim C. & Segal Uzi, 1994. "Dynamic Consistency Implies Approximately Expected Utility Preferences," Journal of Economic Theory, Elsevier, vol. 63(2), pages 170-188, August.
  11. Segal, Uzi, 1997. "Dynamic Consistency and Reference Points," Journal of Economic Theory, Elsevier, vol. 72(1), pages 208-219, January.
  12. John Hey & Massimo Paradiso., "undated". "Dynamic Choice and Timing-Independence: an experimental investigation," Discussion Papers 99/26, Department of Economics, University of York.
  13. Schelling, Thomas C, 1984. "Self-Command in Practice, in Policy, and in a Theory of Rational Choice," American Economic Review, American Economic Association, vol. 74(2), pages 1-11, May.
  14. Karni, E. & Safra, Z., 1988. "Ascending Bid Auctions With Behaviorally Consistent Bidders," Papers 1-88, Tel Aviv.
  15. Sarin, Rakesh & Wakker, Peter P, 1998. "Dynamic Choice and NonExpected Utility," Journal of Risk and Uncertainty, Springer, vol. 17(2), pages 87-119, November.
  16. Hammond, P.J. & , ., 1987. "Consequentialist foundations for expected utility," CORE Discussion Papers 1987016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  17. Karni, Edi & Safra, Zvi, 1990. "Behaviorally consistent optimal stopping rules," Journal of Economic Theory, Elsevier, vol. 51(2), pages 391-402, August.
  18. Karni, Edi & Schmeidler, David, 1991. "Atemporal dynamic consistency and expected utility theory," Journal of Economic Theory, Elsevier, vol. 54(2), pages 401-408, August.
  19. Epstein Larry G. & Le Breton Michel, 1993. "Dynamically Consistent Beliefs Must Be Bayesian," Journal of Economic Theory, Elsevier, vol. 61(1), pages 1-22, October.
  20. Peter J. Hammond, 1976. "Changing Tastes and Coherent Dynamic Choice," Review of Economic Studies, Oxford University Press, vol. 43(1), pages 159-173.
  21. Orphanides, Athanasios & Zervos, David, 1998. "Myopia and Addictive Behaviour," Economic Journal, Royal Economic Society, vol. 108(446), pages 75-91, January.
  22. Teddy Seidenfeld, 2000. "Substitution of indifferent options at choice nodes and admissibility: a reply to Rabinowicz," Theory and Decision, Springer, vol. 48(4), pages 305-310, June.
  23. Cubitt, Robin P & Starmer, Chris & Sugden, Robert, 1998. "Dynamic Choice and the Common Ratio Effect: An Experimental Investigation," Economic Journal, Royal Economic Society, vol. 108(450), pages 1362-1380, September.
  24. Camerer, Colin F, 1989. "An Experimental Test of Several Generalized Utility Theories," Journal of Risk and Uncertainty, Springer, vol. 2(1), pages 61-104, April.
  25. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
  26. Wlodek Rabinowicz, 2000. "Preference stability and substitution of indifferents: a rejoinder to Seidenfeld," Theory and Decision, Springer, vol. 48(4), pages 311-318, June.
  27. Karni, Edi & Schmeidler, David, 1991. "Utility theory with uncertainty," Handbook of Mathematical Economics,in: W. Hildenbrand & H. Sonnenschein (ed.), Handbook of Mathematical Economics, edition 1, volume 4, chapter 33, pages 1763-1831 Elsevier.
Full references (including those not matched with items on IDEAS)

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

as
in new window


Cited by:

  1. Drouhin, Nicolas, 2015. "A rank-dependent utility model of uncertain lifetime," Journal of Economic Dynamics and Control, Elsevier, vol. 53(C), pages 208-224.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Access and download statistics

When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-00004830. 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: (CCSD)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.