Preference for Verifiability

Hendrik Rommeswinkel

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Abstract: Decision makers sometimes cannot observe the consequences of their actions ex-post. This paper axiomatically characterizes a decision model in which the decision maker cares about verifying that a good consequence has been achieved. Preferences over acts identify a set of events the decision maker expects to verify. Decision makers choose acts maximizing, in expectation over verifiable events, the worst-case utility consistent with each event. A dual model captures decision makers who instead seek to obscure poor outcomes from verification. As an application, firms choosing carbon-reduction technologies may prefer less efficient but more verifiable technologies to prove emission reductions to stakeholders.

Date: 2025-08, Revised 2026-03
New Economics Papers: this item is included in nep-dcm, nep-env, nep-mac, nep-mic and nep-upt
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