PREFERENCE FOR FLEXIBILITY AND FREEDOM OF CHOICE IN A SAVAGE FRAMEWORK

Klaus Nehring

Department of Economics from California Davis - Department of Economics

Abstract: In this paper, we study preferences over Savage acts that map states to opportunity sets. Conditional preferences over opportunity sets may be inconsistent with indirect-utility maximization due to implicit uncertainty about future preferences (preference for flexibility), or to an intrinsic preference for freedom of choice.

On a flexibility interpretation, the main result characterizes preferences based on maximizing the expected indirect utility in terms of an "Indirect Stochastic Dominance" axiom. The relevance of the result to a freedom-of-choice context is established on the basis of a novel multi-attribute conceptualization of the notion of effective freedom of choice; the theorem delivers an additive multi-attribute representation with optimal uniqueness properties.

The key technical tool of the paper, a version of M bius inversion has been imported from the theory of (non-additive) "belief-functions;" it also yields a simple and intuitive proof of Kreps's (1979) classic result.

References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.econ.ucdavis.edu/working_papers/96-15.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.econ.ucdavis.edu/working_papers/96-15.pdf [301 Moved Permanently]--> https://economics.ucdavis.edu/working_papers/96-15.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:fth:caldec:96-15

Access Statistics for this paper

More papers in Department of Economics from California Davis - Department of Economics University of California Davis - Department of Economics. One Shields Ave., California 95616-8578. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Krichel ().