Consistent Preferences with Fixed Point Updates

We propose a normative framework for complete preference orderings, in which updating is based on a straightforward fixed point principle. Its scope goes far beyond the Sure Thing Principle, and covers Bayesian updating as a special case, without reference to probabilities. The induced preference reversals are justified on the basis of an interpretation that reconciles consequentialism with adequate forms of choice consistency, and absence of arbitrage. We emphasize the distinction between dynamic choices with or without rights in bygone states, and between choosing if it comes to obtaining versus offering. The framework accommodates the preferences in the Allais and Ellsberg paradoxes, which indicates that the gap between descriptive and normative models is narrower than generally believed.