Hoping for the best while preparing for the worst in the face of uncertainty: a new type of incomplete preferences

Pierre Bardier, Bach Dong-Xuan and Van-Quy Nguyen

Papers from arXiv.org

Abstract: We propose and axiomatize a new model of incomplete preferences under uncertainty, hope-and-prepare preferences: one act is preferred to another if and only if both its optimistic evaluation -- the welfare level attained in the best-case scenario-- and its pessimistic evaluation --the welfare level attained in the worst-case scenario-- rank it above the other. Both evaluations are computed over sets of probability distributions. We make the case that, compared to existing incomplete criteria under ambiguity, hope-and-prepare preferences address the trade-off between conviction and decisiveness in a new way, which is more favorable to decisiveness. We characterize a completion of an incomplete hope-and-prepare preference relation admitting an (asymmetric) $\alpha$-\textit{maxmin expected utility} representation, in which $\alpha$ is unique. Conversely, given a standard $\alpha$-MEU preference and a fixed value of $\alpha$, we recover the concordant hope-and-prepare preference that it completes.

Date: 2024-06, Revised 2026-07
New Economics Papers: this item is included in nep-mic and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://arxiv.org/pdf/2406.11166 Latest version (application/pdf)

Related works:
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:arx:papers:2406.11166

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().