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Moral Hazard and Conditional Preferences

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  • DREZE, Jacques H.

    (CORE, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium)

  • RUSTICHINI, Aldo

    (CORE, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium)

Abstract

Conditional Expected Utility Theory (CEUT) provides an axiomatic foundation for a theory of decision under uncertainty which allows agents to choose which event in the state space will occur. Here we provide an alternative axiomatization of this situation. In this framework CEUT may be seen a special case of Decision Theory with Moral Hazard; at the same time it is possible to describe the conditions in which this theory is free from possible difficulties.

Suggested Citation

  • DREZE, Jacques H. & RUSTICHINI, Aldo, 1995. "Moral Hazard and Conditional Preferences," LIDAM Discussion Papers CORE 1995010, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:1995010
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    Cited by:

    1. DREZE , Jacques H. & RUSTICHINI, Aldo, 2000. "State-dependent utility and decision theory," LIDAM Discussion Papers CORE 2000007, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Wei-zhi Qin & Hendrik Rommeswinkel, 2024. "Quasi-separable preferences," Theory and Decision, Springer, vol. 96(4), pages 555-595, June.
    3. Elias Tsakas, 2022. "Belief identification with state-dependent utilities," Papers 2203.10505, arXiv.org, revised Nov 2022.
    4. Elias Tsakas, 2021. "Identification of misreported beliefs," Papers 2112.12975, arXiv.org.
    5. Karni, Edi, 2007. "Foundations of Bayesian theory," Journal of Economic Theory, Elsevier, vol. 132(1), pages 167-188, January.
    6. Karni, Edi, 2009. "A reformulation of the maxmin expected utility model with application to agency theory," Journal of Mathematical Economics, Elsevier, vol. 45(1-2), pages 97-112, January.
    7. Luciano Castro & Marialaura Pesce & Nicholas Yannelis, 2011. "Core and equilibria under ambiguity," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 48(2), pages 519-548, October.
    8. Hamed Hamze Bajgiran & Houman Owhadi, 2021. "Aggregation of Models, Choices, Beliefs, and Preferences," Papers 2111.11630, arXiv.org.
    9. Elias Tsakas, 2023. "Belief identification by proxy," Papers 2311.13394, arXiv.org.

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