ON THE MULTI-PREFERENCE APPROACH TO EVALUATING OPPORTUNITIES

Klaus Nehring, Clemens Puppe and James D. Hamilton
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James D. Hamilton: Department of Economics, University of California Davis

No 114, Working Papers from University of California, Davis, Department of Economics

Abstract: The purpose of the paper is to provide a general framework for analyzing ""preference for opportunities."" Based on two simple axioms a fundamental result due to Kreps is used in order to represent rankings of opportunity sets in terms of multiple preferences. The paper provides several refinements of the basic representation theorem. In particular, a condition of ""closedness under compromise"" is suggested in order to distinguish the flexibility interpretation of the model from normative interpretations which play a crucial role in justifying the intrinsic value of opportunities. Moreover, the paper clarifies the link between the multiple preference approach and the ""choice function"" approach to evaluating opportunities. In particular, it is shown how the well-known Aizerman/Malishevski result on rationalizability of choice functions can be obtained as a corollary from the more general multiple preference representation of a ranking of opportunity sets.

Pages: 25
Date: 2003-01-07
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