Konferenzbeitrag
An axiomatic foundation of entropic preferences under Knightian uncertainty
Decision-making about economy-environment systems is often characterized by deep uncertainties. We provide an axiomatic foundation of preferences over lotteries with known payoffs over known states of nature and unknown probabilities of these outcomes (“Knightian uncertainty"). We elaborate the fundamental idea that preferences over Knightian lotteries can be represented by an entropy function (sensu Lieb and Yngvason 1999) of these lotteries. Based on nine axioms on the preference relation and three assumptions on the set of lotteries, we show that there uniquely (up to linear-affine transformations) exists an additive and extensive real-valued function (\entropy function") that represents uncertainty preferences. It represents non-satiation and (constant) uncertainty aversion. As a concrete functional form, we propose a one-parameter function based on Rényi's (1961) generalized entropy. We show that the parameter captures the degree of uncertainty aversion. We illustrate our preference function with a simple decision problem and relate it to other decision rules under Knightian uncertainty (maximin, maximax, Hurwicz, Laplacian expected utility, minimum regret).
- Sprache
-
Englisch
- Erschienen in
-
Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2018: Digitale Wirtschaft - Session: Theory - Concepts ; No. G04-V2
- Klassifikation
-
Wirtschaft
Criteria for Decision-Making under Risk and Uncertainty
Fiscal Policies and Behavior of Economic Agents: General
- Thema
-
axiomatic foundation
entropy
Knightian uncertainty
non-expected utility
preferences
Rényi-function
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Baumgärtner, Stefan
Engler, John-Oliver
- Ereignis
-
Veröffentlichung
- (wer)
-
ZBW - Leibniz-Informationszentrum Wirtschaft
- (wo)
-
Kiel, Hamburg
- (wann)
-
2018
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Konferenzbeitrag
Beteiligte
- Baumgärtner, Stefan
- Engler, John-Oliver
- ZBW - Leibniz-Informationszentrum Wirtschaft
Entstanden
- 2018
Ähnliche Objekte (12)
The Axiomatic Foundation of Logit
An axiomatic foundation of conditional logit
An axiomatic foundation of conditional logit
Additivity of entropic uncertainty relations
An Axiomatic Foundation of the Ecological Footprint
Entropic uncertainty relations from quantum designs
Entropic uncertainty relation in neutrino oscillations
On the Axiomatic Foundation of Ecological Footprint Indices
Conditional entropic uncertainty relations for Tsallis entropies
On the axiomatic foundation of carbon and energy footprints
Measurements of entropic uncertainty relations in neutron optics
Holevo bound of entropic uncertainty in Schwarzschild spacetime
The Axiomatic Foundation of Logit
An axiomatic foundation of conditional logit
An axiomatic foundation of conditional logit
Additivity of entropic uncertainty relations
An Axiomatic Foundation of the Ecological Footprint
Entropic uncertainty relations from quantum designs
Entropic uncertainty relation in neutrino oscillations
On the Axiomatic Foundation of Ecological Footprint Indices
Conditional entropic uncertainty relations for Tsallis entropies
On the axiomatic foundation of carbon and energy footprints
Measurements of entropic uncertainty relations in neutron optics
Holevo bound of entropic uncertainty in Schwarzschild spacetime
The Axiomatic Foundation of Logit
An axiomatic foundation of conditional logit
An axiomatic foundation of conditional logit
Additivity of entropic uncertainty relations
An Axiomatic Foundation of the Ecological Footprint
Entropic uncertainty relations from quantum designs
Entropic uncertainty relation in neutrino oscillations
On the Axiomatic Foundation of Ecological Footprint Indices
Conditional entropic uncertainty relations for Tsallis entropies
On the axiomatic foundation of carbon and energy footprints
Measurements of entropic uncertainty relations in neutron optics