An Explicit Representation for Disappointment Aversion and Other Betweenness Preferences
David Dillenberger and
No 631, Working Papers from IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University
One of the most well-known models of non-expected utility is Gul (1991)’s bmodel of Disappointment Aversion. This model, however, is defined implicitly, as the solution to a functional equation; its explicit utility representation is unknown, which may limit its applicability. We show that an explicit representation can be easily constructed, using solely the components of the implicit one. We also provide a more general result: an explicit representation for preferences in the Betweenness class that also satisfy Negative Certainty Independence (Dillenberger, 2010). JEL: D80, D81 KEYWORDS: Betweenness, Cautious Expected Utility, Disappointment Aversion, Utility representation.
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