A model of procedural decision making in the presence of risk

Juan Dubra, Efe A. Ok

    Research output: Contribution to journalArticle

    Abstract

    We introduce a procedural model of risky choice in which an individual is endowed with a core preference relation that may be highly incomplete. She can, however, derive further rankings of alternatives from her core preferences by means of a procedure based on the independence axiom. We find that the preferences that are generated from an initial set of rankings according to this procedure can be represented by means of a set of von Neumann-Morgenstern utility functions, thereby allowing for incompleteness of preference relations. The proposed theory also yields new characterizations of the stochastic dominance orderings.

    Original languageEnglish (US)
    Pages (from-to)1053-1080
    Number of pages28
    JournalInternational Economic Review
    Volume43
    Issue number4
    DOIs
    StatePublished - Nov 2002

    ASJC Scopus subject areas

    • Economics and Econometrics

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