What Do Uncertainty-Averse Decision-Makers Believe? A Note

Matthew Ryan

No 143, Working Papers from Department of Economics, The University of Auckland

Abstract: The aim of this note is to plug an important gap in our understanding of the epistemic foundations of uncertainty-averse behavior. For Choquet expected utility maximizers (Schmeidler (1989)), the beliefs which motivate uncertainty-averse choice are frequently identified using Dow and Werlang's (1994) notion of support for convex capacities. Building on the work of Morris (1997), we present a new, preference-based belief operator which is is shown to characterize such epistemic inferences. This makes their behavioral foundations transparent, and enables readier comparison with alternative epistemic models for such behavior.

Keywords: Economics (search for similar items in EconPapers)
Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:auc:wpaper:143

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