Twofold multiprior preferences and failures of contingent reasoning

Federico Echenique, Masaki Miyashita, Yuta Nakamura, Luciano Pomatto and Jamie Vinson

Journal of Economic Theory, 2022, vol. 202, issue C

Abstract: We propose a model of incomplete twofold multiprior preferences, in which an act f is ranked above an act g only when f provides higher utility in a worst-case scenario than what g provides in a best-case scenario. The model explains failures of contingent reasoning, captured through a weakening of the state-by-state monotonicity (or dominance) axiom. Our model gives rise to rich comparative statics results, as well as extension exercises, and connections to choice theory. We present an application to second-price auctions.

Keywords: Decision theory; Incomplete preference; Conservatism; Obvious dominance (search for similar items in EconPapers)
JEL-codes: D01 D81 D90 (search for similar items in EconPapers)
Date: 2022
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Working Paper: Twofold Multiprior Preferences and Failures of Contingent Reasoning (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:202:y:2022:i:c:s0022053122000382

DOI: 10.1016/j.jet.2022.105448

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