Preferences under ignorance

Olivier Gossner and Christoph Kuzmics

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: A decision maker (DM) makes choices from different sets of alternatives. The DM is initially ignorant of the payoff associated with each alternative, and learns these payoffs only after a large number of choices have been made. We show that, in the presence of an outside option, once payoffs are learned, the optimal choice rule from sets of alternatives can be rationalized by a DM with strict preferences over all alternatives. Under this model, the DM has preferences for preferences while being ignorant of what preferences are “right”.

Keywords: consistency; rationality; weak axiom of revealed preferences; strict preference (search for similar items in EconPapers)
JEL-codes: C73 D01 D11 (search for similar items in EconPapers)
Date: 2018-08-16
New Economics Papers: this item is included in nep-mic and nep-upt
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Published in International Economic Review, 16, August, 2018. ISSN: 0020-6598

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http://eprints.lse.ac.uk/87332/ Open access version. (application/pdf)

Related works:
Journal Article: PREFERENCES UNDER IGNORANCE (2019)
Working Paper: Preferences under ignorance (2017)
Working Paper: Preferences under ignorance (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:87332

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