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On the Skiadas 'Conditional Preference Approach' to Choice Under Uncertainty

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Abstract

We compare the Skiadas approach with the standard Savage framework of choice under uncertainty. At first glance, properties of Skiadas "conditional preferences" such as coherence and disappointment seem analogous to similarly motivated notions of decomposability and disappointment aversion defined on Savage "ex ante preferences." We show, however, that coherence per se places almost no restriction on the structure of ex ante preferences. Coherence is an `external' restriction across preferences whereas notions of decomposability in the Savage framework are 'internal' to the particular preference relation. Similarly, standard notions of disappointment aversion refer to 'within act' disappointments. Skiadas's notion of disappointment aversion for families of conditional preference relations neither implies nor is implied by standard notions of disappointment aversion for ex ante preferences.

Suggested Citation

  • Simon Grant & Atsushi Kajii & Ben Polak, 1998. "On the Skiadas 'Conditional Preference Approach' to Choice Under Uncertainty," Cowles Foundation Discussion Papers 1178, Cowles Foundation for Research in Economics, Yale University.
  • Handle: RePEc:cwl:cwldpp:1178
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    File URL: https://cowles.yale.edu/sites/default/files/files/pub/d11/d1178.pdf
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    1. Gilboa Itzhak & Schmeidler David, 1993. "Updating Ambiguous Beliefs," Journal of Economic Theory, Elsevier, vol. 59(1), pages 33-49, February.
    2. Grant, Simon & Kajii, Atsushi & Polak, Ben, 2000. "Decomposable Choice under Uncertainty," Journal of Economic Theory, Elsevier, vol. 92(2), pages 169-197, June.
    3. Costis Skiadas, 1997. "Conditioning and Aggregation of Preferences," Econometrica, Econometric Society, vol. 65(2), pages 347-368, March.
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    More about this item

    Keywords

    Skiadas; decomposable choice; disappointment aversion; coherent preferences;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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