Parametric representation of preferences

Nabil I. Al-Najjar*, Luciano De Castro

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

Abstract

A preference is invariant with respect to a set of transformations if the ranking of acts is unaffected by reshuffling the states under these transformations. For example, transformations may correspond to the set of finite permutations, or the shift in a dynamic choice model. Our main result is that any invariant preference must be parametric: there is a unique sufficient set of parameters such that the preference ranks acts according to their expected utility given the parameters. Parameters are characterized in terms of objective frequencies, and can thus be interpreted as objective probabilities. By contrast, uncertainty about parameters is subjective. The preferences for which the above results hold are only required to be reflexive, transitive, monotone, continuous, and mixture linear.

Original languageEnglish (US)
Pages (from-to)642-667
Number of pages26
JournalJournal of Economic Theory
Volume150
Issue number1
DOIs
StatePublished - 2014

Keywords

  • A1
  • Decision making
  • Parameters
  • Uncertainty

ASJC Scopus subject areas

  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Parametric representation of preferences'. Together they form a unique fingerprint.

Cite this