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4. Variational bewley preferences

Type:	Artigo Científico
Title:	Variational bewley preferences
Author:	Faro, José Heleno
Publication Date:	2015
Abstract:	This paper characterizes variational Bewley preferences over Anscombe and Aumann acts, a class of binary relations that may fail completeness or transitivity vis à vis independence. The main result gives an axiomatization of preference relations ≿ represented as follows:f≿g⇔∫u(f)dp+η(p)≥∫u(g)dpfor allp∈Δ,where u is an affine utility index over a convex set X of consequences, η:Δ→[0,∞] is an ambiguity index, and Δ is the set of priors over the state space S. This representation has a natural interpretation as a weighted unanimity rule, with the function η reflecting the weight given to a prior and higher values of η corresponding to priors given less weight. Bewley's incomplete preferences can be identified precisely with the addition of transitivity or independence, and a prior receives weight either 0 if plausible or ∞ when discarded. Also, by adding only completeness, we recover subjective expected utility, i.e., the lack of transitivity implies incompleteness. Finally, we find a strong connection of our model with the class of variational preferences.
Keywords (english terms):	Ambiguity Knightian uncertainty Incomplete preferences Intransitivity Variational preferences
Language:	Inglês
CNPq Area:	Ciências Sociais Aplicadas
URI:	https://www.sciencedirect.com/science/article/pii/S0022053115000356
Copyright:	O INSPER E ESTE REPOSITÓRIO NÃO DETÊM OS DIREITOS DE USO E REPRODUÇÃO DOS CONTEÚDOS AQUI REGISTRADOS. É RESPONSABILIDADE DOS USUÁRIOS INDIVIDUAIS VERIFICAR OS USOS PERMITIDOS NA FONTE ORIGINAL, RESPEITANDO-SE OS DIREITOS DE AUTOR OU EDITOR
Appears in Collections:	Coleção de Artigos Científicos

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