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Axioms for minimax regret choice correspondences

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  • Stoye, Jörg

Abstract

This paper unifies and extends the recent axiomatic literature on minimax regret. It compares several models of minimax regret, shows how to characterize the according choice correspondences in a unified setting, extends one of them to choice from convex (through randomization) sets, and connects them by defining a behavioral notion of perceived ambiguity. Substantively, a main idea is to behaviorally identify ambiguity with failures of independence of irrelevant alternatives. Regarding proof technique, the core contribution is to uncover a dualism between choice correspondences and preferences in an environment where this dualism is not obvious. This insight can be used to generate results by importing findings from the existing literature on preference orderings.

Suggested Citation

  • Stoye, Jörg, 2011. "Axioms for minimax regret choice correspondences," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2226-2251.
    • Handle: RePEc:eee:jetheo:v:146:y:2011:i:6:p:2226-2251
    DOI: 10.1016/j.jet.2011.10.004
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    More about this item

    Keywords

    Minimax regret; Ambiguity; Ambiguity aversion; Multiple priors; Choice correspondences;
    All these keywords.

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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