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4. Dynamically consistent objective and subjective rationality

Type:	Artigo Científico
Title:	Dynamically consistent objective and subjective rationality
Author:	Faro, José Heleno Bastianello, Lorenzo Santos, Ana
Publication Date:	2022
Abstract:	A group of experts, for instance climate scientists, is to advise a decision maker about the choice between two policies f and g. Consider the following decision rule. If all experts agree that the expected utility of f is higher than the expected utility of g, the unanimity rule applies, and f is chosen. Otherwise, the precautionary principle is implemented and the policy yielding the highest minimal expected utility is chosen. This decision rule may lead to time inconsistencies when adding an intermediate period of partial resolution of uncertainty. We show how to coherently reassess the initial set of experts’ beliefs so that precautionary choices become dynamically consistent: new beliefs should be added until one obtains the smallest “rectangular set” that contains the original one. Our analysis offers a novel behavioral characterization of rectangularity and a prescriptive way to aggregate opinions in order to avoid sure regret.
Keywords (english terms):	ambiguity aversion dynamic consistency objective rationality subjective rationality full Bayesian updating rectangularity
Language:	Inglês
CNPq Area:	Ciências Sociais Aplicadas
URI:	https://link.springer.com/article/10.1007/s00199-022-01437-1
Copyright:	O INSPER E ESTE REPOSITÓRIO NÃO DETÊM OS DIREITOS DE USO E REPRODUÇÃO DOS CONTEÚDOS AQUI REGISTRADOS. É RESPONSABILIDADE DO USUÁRIO VERIFICAR OS USOS PERMITIDOS NA FONTE ORIGINAL, RESPEITANDO-SE OS DIREITOS DE AUTOR OU EDITOR.
Notes:	Texto completo
Appears in Collections:	Coleção de Artigos Científicos

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