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Preferences under ignorance

Author

Listed:
  • Olivier Gossner

    (CREST; CNRS; Ecole polytechnique; Université Paris-Saclay; London School of Economics)

  • Christoph Kuzmics

    (University of Graz)

Abstract

A decision maker (DM) makes choices from different sets of alternatives. The DM is initially ignorant of the payoff associated to each alternative, and learns these payoffs only after a large number of choices have been made. We show that, in the presence of an outside option once payoffs are learned, the optimal choice rule from sets of alternatives is one that is as if the DM had strict preferences over all alternatives. Under this model, the DM has preferences for preferences while being ignorant of what preferences are “right”.

Suggested Citation

  • Olivier Gossner & Christoph Kuzmics, 2017. "Preferences under ignorance," Working Papers 2017-52, Center for Research in Economics and Statistics.
    • Handle: RePEc:crs:wpaper:2017-52
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    References listed on IDEAS

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    Cited by:

    1. Jakub Steiner & Colin Stewart, 2016. "Perceiving Prospects Properly," American Economic Review, American Economic Association, vol. 106(7), pages 1601-1631, July.
    2. Guarino, Pierfrancesco & Ziegler, Gabriel, 2022. "Optimism and pessimism in strategic interactions under ignorance," Games and Economic Behavior, Elsevier, vol. 136(C), pages 559-585.

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    More about this item

    Keywords

    consistency; rationality; weak axiom of revealed preferences; strict preference;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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