Objective and Subjective Rationality in a Multiple Prior Model

Itzhak Gilboa, Fabio Maccheroni, Massimo Marinacciand and David Schmeidler

No 275721, Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research

Abstract: A decision maker is characterized by two binary relations. The first reflects decisions that are rational in an “objective” sense: the decision maker can convince others that she is right in making them. The second relation models decisions that are rational in a “subjective” sense: the decision maker cannot be convinced that she is wrong in making them. We impose axioms on these relations that allow a joint representation by a single set of prior probabilities. It is “objectively rational” to choose f in the presence of g if and only if the expected utility of f is at least as high as that of g given each and every prior in the set. It is “subjectively rational” to choose f rather than g if and only if the minimal expected utility of f (relative to all priors in the set) is at least as high as that of g.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 54
Date: 2009-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://ageconsearch.umn.edu/record/275721/files/2-2009.pdf (application/pdf)

Related works:
Journal Article: Objective and Subjective Rationality in a Multiple Prior Model (2010)
Working Paper: Objective and Subjective Rationality in a Multiple Prior Model (2010)
Working Paper: Objective and Subjective Rationality in a Multiple Prior Model (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:isfiwp:275721

DOI: 10.22004/ag.econ.275721

Access Statistics for this paper

More papers in Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search (aesearch@umn.edu).