Arbeitspapier

Induced Preferences and Decision-Making Under Risk and Uncertainty

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In this paper we suggest a new interpretation of non-additive probabilities. We study a decision-maker who follows the Savage axioms. We show the if (s)he is able to take unobservable actions which influence the probabilities of outcomes then it can appear to an outsider as if the his/her subjective probabilities are non-additive. We make a related analysis of models with objective probabilities and show that the induced preferences can have the rank dependent expected utility form. Implications for multi-period decisions are explored. We show that such preferences are not vulnerable to "Dutch books".

Language
Englisch

Bibliographic citation
Series: Queen's Economics Department Working Paper ; No. 897

Classification
Wirtschaft
Criteria for Decision-Making under Risk and Uncertainty
Subject
uncertainty aversion
induced preferences
Dutch Book
rank dependent expected utility

Event
Geistige Schöpfung
(who)
Milne, Frank
Kelsey, David
Event
Veröffentlichung
(who)
Queen's University, Department of Economics
(where)
Kingston (Ontario)
(when)
1994

Handle
Last update
10.03.2025, 11:44 AM CET

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Object type

  • Arbeitspapier

Associated

  • Milne, Frank
  • Kelsey, David
  • Queen's University, Department of Economics

Time of origin

  • 1994

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