What do uncertainty-averse decision-makers believe?

Matthew J. Ryan ()
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Matthew J. Ryan: School of Economics, The Australian National University, Canberra, ACT 0200, AUSTRALIA

Economic Theory, 2002, vol. 20, issue 1, 47-65

Abstract: This paper introduces the concept of firm belief, which is proposed as a new epistemic model for a wide class of preferences. In particular, firm beliefs are shown to have the following desirable properties: (i) they are derived from preferences according to a plausible rule of epistemic inference; (ii) they satisfy standard logical properties; and (iii) tractable representations of firm belief are available for all (suitably continuous) biseparable preferences [13, 14], including the Choquet expected utility [30] and maxmin expected utility [16] classes. We also use firm belief to construct a generalization of Nash equilibrium for (two-player) normal form games.

Keywords: Epistemic foundations of decisions; Biseparable preferences; Normal form games. (search for similar items in EconPapers)
JEL-codes: C72 D81 (search for similar items in EconPapers)
Date: 2002-02-20
Note: Received: December 14, 1999; revised version: February 26, 2001
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Citations: View citations in EconPapers (28)

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