Twofold Multiprior Preferences and Failures of Contingent Reasoning

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

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Abstract: We propose a model of incomplete \textit{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.

Date: 2020-12, Revised 2022-01
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (7)

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Journal Article: Twofold multiprior preferences and failures of contingent reasoning (2022)
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