A general theory of subjective mixtures

Paolo Ghirardato and Daniele Pennesi ()

No 573, Carlo Alberto Notebooks from Collegio Carlo Alberto

Abstract: We provide a framework for constructing subjective mixtures which requires neither the Certainty Independence nor the Monotonicity axiom, replacing them with much weaker “local” properties. Aswe showby means of examples, this framework provides a purely subjective foundation to most of the recent preference modelswhich employ an Anscombe-Aumann setting. It also allows disentagling the notions of ambiguity aversion and preference for randomization. The scope of our framework is further demonstrated by discussing how subjective mixtures can be employed in modelling choice between menus of consequences, and also by providing a fully subjective axiomatization of Recursive Variational Preferences.

Keywords: Subjective Mixture Space; Ambiguity Aversion; Preference for Randomization (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Pages: pages 43
Date: 2018, Revised 2020
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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Journal Article: A general theory of subjective mixtures (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:cca:wpaper:573

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