Objective and subjective rationality and decisions with the best and worst case in mind

Simon Grant, Patricia Rich () and Jack Stecher
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Patricia Rich: University of Bayreuth

Theory and Decision, 2021, vol. 90, issue 3, No 2, 309-320

Abstract: Abstract We study decision under uncertainty in an Anscombe–Aumann framework. Two binary relations characterize a decision-maker: one (in general) incomplete relation, reflecting her objective rationality, and a second complete relation, reflecting her subjective rationality. We require the latter to be an extension of the former. Our key axiom is a dominance condition. Our main theorem provides a representation of the two relations. The objectively rational relation has a Bewley-style multiple prior representation. Using this set of priors, we fully characterize the subjectively rational relation in terms of the most optimistic and most pessimistic expected utilities.

Keywords: Ambiguity; Incomplete preferences; Optimism; Pessimism (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s11238-020-09777-x

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