Hoping for the best while preparing for the worst in the face of uncertainty: a new type of incomplete preferences

Pierre Bardier, Bach Dong-Xuan and Van-Quy Nguyen
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Pierre Bardier: Center for Mathematical Economics, Bielefeld University
Bach Dong-Xuan: Center for Mathematical Economics, Bielefeld University
Van-Quy Nguyen: Center for Mathematical Economics, Bielefeld University

No 701, Center for Mathematical Economics Working Papers from Center for Mathematical Economics, Bielefeld University

Abstract: We propose and axiomatize a new model of incomplete preferences under uncertainty, which we call *hope-and-prepare preferences*. An act is considered more desirable than another when, and only when, both an optimistic evaluation, computed as the welfare level attained in a best-case scenario, and a pessimistic one, computed as the welfare level attained in a worst-case scenario, rank the former above the latter. Our comparison criterion involves multiple priors, as best and worst cases are determined among sets of probability distributions. We make the case that, compared to existing incomplete criteria under ambiguity, hope-and-prepare preferences address the trade-off between conviction and decisiveness in a new way, which is more favorable to decisiveness.

Keywords: Decision theory; Incomplete preference; Multiple-selves; Non-obvious manipulability (search for similar items in EconPapers)
Pages: 46
Date: 2025-02-18
New Economics Papers: this item is included in nep-mic and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:bie:wpaper:701

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