Median-based Rules for Decision-making under Complete Ignorance

Aditi Bhattacharyya ()
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Aditi Bhattacharyya: Department of Economics and International Business, Sam Houston State University

No 1010, Working Papers from Sam Houston State University, Department of Economics and International Business

Abstract: This paper characterizes a class of rules for decision-making when an agent knows the possible states of the world and the outcome of each of her actions for each state, but does not have any information about the probabilities of the states. The existing literature in this framework has mainly considered `max’-based or `min’-based rules and their variants. Such rules reflect rather extreme forms of optimism or pessimism on the part of an agent. In contrast, this paper focuses on the median outcome(s) and characterizes a class of decision-making rules, which reflects a more `balanced' attitude towards uncertainty.

Date: 2010-12
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