Consistent dynamic choice and non-expected utility preferences

André Lapied () and Pascal Toquebeuf ()
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Pascal Toquebeuf: GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper studies the application of the two most popular non-expected utility (NEU) models -Choquet Expected Utility (CEU) and Maximin Expected Utility (CEU)- to dynamic choice situations in a purely subjective framework. We give an appropriate version of the reduction of compound acts axiom, that states the equivalence between a static and a dynamic choice situation. We show that if consequentialism -only those consequences that can be reached do matter- is additionally assumed, then a monotonic constant linear representation degenerate into expected utility. We envisage two different ways to resolve this problem for the cases where the representation is a CEU or a MEU one. One way consists to weaken the reduction of compound acts axiom, which does not hold on all events. Another way is to relax consequentialism. Then we axiomatically characterize an updating rule for both approaches allowing recursion in several cases.

Keywords: Choquet expected utility; Maximin expected utility; Consequentialism; Reduction of compound acts; Dynamic choice; Updating (search for similar items in EconPapers)
Date: 2009-09-13
Note: View the original document on HAL open archive server: https://hal.science/hal-00416214
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Citations: View citations in EconPapers (2)

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Working Paper: CONSISTENT DYNAMICE CHOICE AND NON-EXPECTED UTILITY PREFERENCES (2007)
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