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

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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.

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File URL: https://halshs.archives-ouvertes.fr/halshs-00004830/document
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Paper provided by HAL in its series Post-Print with number halshs-00004830.

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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;

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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.
  2. Maria J. Ruiz Martos, 2017. "Individual Dynamic Choice Behaviour and the Common Consequence Effect," ThE Papers 17/01, Department of Economic Theory and Economic History of the University of Granada..
  3. Maria J. Ruiz Martos, 2017. "Random Lottery Incentive Mechanism in Dynamic Choice Experiments," ThE Papers 17/02, Department of Economic Theory and Economic History of the University of Granada..

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