A model of procedural decision making in the presence of risk

Juan Dubra, Ahmet 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 - 2002

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    Preference relation
    Ranking
    Decision making
    Independence axiom
    Risky choice
    Incompleteness
    Utility function
    Stochastic dominance

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    A model of procedural decision making in the presence of risk. / Dubra, Juan; Ok, Ahmet.

    In: International Economic Review, Vol. 43, No. 4, 2002, p. 1053-1080.

    Research output: Contribution to journalArticle

    Dubra, Juan ; Ok, Ahmet. / A model of procedural decision making in the presence of risk. In: International Economic Review. 2002 ; Vol. 43, No. 4. pp. 1053-1080.
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