Preference for flexibility and dynamic consistency with incomplete preferences

We generalize a previous result about dynamically consistent menu preferences to the case where preferences are not necessarily complete. We show that, as it is the case when preferences are complete, a subjective state space version of dynamic consistency is linked to a comparative theory of prefer...

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Bibliographic Details
Published in:Theory and decision 2021-03, Vol.90 (2), p.171-181
Main Authors: de Moura, Fernanda Senra, Riella, Gil
Format: Article
Language:English
Subjects:
Agents
Behavioral/Experimental Economics
Consistency
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Finance
Flexibility
Game Theory
Insurance
Management
Operations Research/Decision Theory
Preferences
Social and Behav. Sciences
Statistics for Business
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Summary:We generalize a previous result about dynamically consistent menu preferences to the case where preferences are not necessarily complete. We show that, as it is the case when preferences are complete, a subjective state space version of dynamic consistency is linked to a comparative theory of preference for flexibility. In words, an objective signal is interpreted as an event in the agent’s subjective state space and the agent acts in a dynamically consistent way after that if and only if we can attribute all the differences between the agent’s preferences before and after the signal to the fact that the agent values flexibility more before the signal than after.
ISSN:0040-5833
1573-7187
DOI:10.1007/s11238-020-09776-y