Consistent Preferences with Reversals
نویسندگان
چکیده
We propose an axiomatic framework for updating complete preference orderings without the monotonicity axiom. The induced preference reversals are justified on the basis of a normative interpretation that reconciles consequentialism with adequate forms of choice consistency. We conclude that preferences need not, and in some contexts even should not be recursive, thus confirming the intuition of the Allais and Ellsberg paradoxes.
منابع مشابه
Preference reversals: The impact of truth-revealing monetary incentives
Researchers vigorously debate the impact of incentives in preference reversal experiments. Do incentives alter behavior and generate economically consistent choices? Lichtenstein and Slovic (1971) document inconsistencies (reversals) in revealed preference in gamble pairs across paired choice and individual pricing tasks. The observed pattern is inconsistent with stable underlying preferences e...
متن کاملPreference Reversals of a Different Kind: The "More Is Less" Phenomenon
The theory of riskless choice, as pioneered by Jeremy Bentham and James Mill, characterizes utility maximization as an individual process whereby decision makers' preferences are consistent and stable. If preferences are labile and subject to the whims of circumstance, then no optimization principles may underlie even the most straightforward of choices (David M. Grether and Charles Plott, 1979...
متن کاملRisk, Delay, and Convex Self-Control Costs
The dual-self model supposes that decision-making involves a conflict between the desire for immediate and safe gratification on the one hand, and riskier long term benefits on the other. This conflict is resolved through a decision criterion that puts weights on both desires. A key element of the model is that this weighting is endogenous, and that changes in constraints that have the same eff...
متن کاملRevealed Reversals of Preferences
We weaken the implicit assumption of rational choice theory that imposes that preferences do not depend on the choice set. We concentrate on the cases where the preferences change monotonically when the choice set expands. We show that rationalizability is then equivalent to state the usual strong axiom of revealed preferences to the binary relation of "revealed reversals of preferences".
متن کاملPreference Reversals and Probabilistic Choice
Preference reversals occur when different (but formally equivalent) elicitation methods reveal conflicting preferences over two alternatives. This paper shows that when people have fuzzy preferences i.e. when they choose in a probabilistic manner, their observed decisions can generate systematic preference reversals. A simple model of probabilistic choice and valuation can account for a higher ...
متن کامل