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Adequate Moods for Non-EU Decision Making in a Sequential Framework

Nathalie Etchart-Vincent

CIRED Working Papers from HAL

Abstract: In a dynamic (sequential) framework, departures from the independence axiom (IND) are reputed to induce violations of dynamic consistency (DC), which may in turn have undesirable normative consequences. This result thus questions the normative acceptability of non expected-utility (non-EU) models, which precisely relax IND. This paper pursues a twofold objective. The main one is to discuss the normative conclusion: we show that usual arguments linking violations of DC to departures from IND are actually based on specific (but usually remaining implicit) assumptions which may rightfully be released, so that it is actually possible for a non-EU maximizer to be dynamically consistent and thus avoid normative difficulties. Our second objective is to introduce a kind of 'reality principle' (through two other evaluation criteria) in order to mitigate the normative requirement when examining adequate moods for non-EU decision making.

Keywords: consequentialism; Non-expected utility; sequential choice; dynamic consistency; money pump; consequentialism. (search for similar items in EconPapers)
Date: 2005-10-05
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00004832
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Journal Article: Adequate Moods for non-eu Decision Making in a Sequential Framework (2002) Downloads
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