A universal update rule for consistent choice

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Abstract

We propose a framework for complete preference orderings that reconciles two existing principles for conditional choice, without compromise: plan consistency, taking replacement values as non-consequentialist updates, and sequential consistency, identifying one of these updates as the consequentialist one, by a fixed point rule. The static axioms of the framework characterize their existence and uniqueness, and exclude forms of Dutch book opportunities. The normative claim relies on the global interpretation of preference orderings.

We review some implications for preferences based on multiple priors, address an issue in updating capacities, and suggest a weakening of the comonotonicity axiom.

The framework supports weak decomposability, as one of the possible directions to weaken the Sure Thing Principle, and betweenness, as the only one under law invariance. We indicate how betweenness accommodates the inverted S-shaped probability weighting common in Prospect Theory, and conclude that the commonly adopted narrow boundaries of rational choice need thorough revision.
Original languageEnglish
Number of pages39
Publication statusUnpublished - 9 Oct 2019

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Betweenness
Multiple priors
Axioms
Invariance
Compromise
Prospect theory
Uniqueness
Comonotonicity
Sure-thing principle
Probability weighting
Axiom
Replacement
Rational choice
Decomposability
Fixed point

Cite this

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title = "A universal update rule for consistent choice",
abstract = "We propose a framework for complete preference orderings that reconciles two existing principles for conditional choice, without compromise: plan consistency, taking replacement values as non-consequentialist updates, and sequential consistency, identifying one of these updates as the consequentialist one, by a fixed point rule. The static axioms of the framework characterize their existence and uniqueness, and exclude forms of Dutch book opportunities. The normative claim relies on the global interpretation of preference orderings. We review some implications for preferences based on multiple priors, address an issue in updating capacities, and suggest a weakening of the comonotonicity axiom. The framework supports weak decomposability, as one of the possible directions to weaken the Sure Thing Principle, and betweenness, as the only one under law invariance. We indicate how betweenness accommodates the inverted S-shaped probability weighting common in Prospect Theory, and conclude that the commonly adopted narrow boundaries of rational choice need thorough revision.",
author = "Berend Roorda and Joosten, {Reinoud A.M.G.}",
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N2 - We propose a framework for complete preference orderings that reconciles two existing principles for conditional choice, without compromise: plan consistency, taking replacement values as non-consequentialist updates, and sequential consistency, identifying one of these updates as the consequentialist one, by a fixed point rule. The static axioms of the framework characterize their existence and uniqueness, and exclude forms of Dutch book opportunities. The normative claim relies on the global interpretation of preference orderings. We review some implications for preferences based on multiple priors, address an issue in updating capacities, and suggest a weakening of the comonotonicity axiom. The framework supports weak decomposability, as one of the possible directions to weaken the Sure Thing Principle, and betweenness, as the only one under law invariance. We indicate how betweenness accommodates the inverted S-shaped probability weighting common in Prospect Theory, and conclude that the commonly adopted narrow boundaries of rational choice need thorough revision.

AB - We propose a framework for complete preference orderings that reconciles two existing principles for conditional choice, without compromise: plan consistency, taking replacement values as non-consequentialist updates, and sequential consistency, identifying one of these updates as the consequentialist one, by a fixed point rule. The static axioms of the framework characterize their existence and uniqueness, and exclude forms of Dutch book opportunities. The normative claim relies on the global interpretation of preference orderings. We review some implications for preferences based on multiple priors, address an issue in updating capacities, and suggest a weakening of the comonotonicity axiom. The framework supports weak decomposability, as one of the possible directions to weaken the Sure Thing Principle, and betweenness, as the only one under law invariance. We indicate how betweenness accommodates the inverted S-shaped probability weighting common in Prospect Theory, and conclude that the commonly adopted narrow boundaries of rational choice need thorough revision.

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