Dynamic Consistency and Reference Points
نویسنده
چکیده
This note provides a positive answer to the following question. Is it possible to define a set of preference relations, one for each node of a decision tree, such that these preferences satisfy the reduction of compound lotteries axiom and dynamic consistency, and yet do not converge to expected utility? It is argued that updated preferences necessarily have one affine indifference curve but that other indifference curves are unrestricted. A connection is drawn to modelling ``reference points.'' Journal of Economic Literature Classification number: D81. 1997 Academic Press
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تاریخ انتشار 1997