Abstract

http://ssrn.com/abstract=1560842
 
 

Citations (1)



 
 

Footnotes (42)



 


 



Lattices, Lotteries and Choice


Elena Antoniadou


Independent

February 28, 2010


Abstract:     
This paper addresses the classic Arrow-Pratt model of choice under uncertainty, relaxing one important condition, and using different tools. The condition relaxed is the single variable in preferences, by allowing for imperfect substitutability in preferences. The tools used are not topological but lattice theoretic. It is argued that when goods are imperfectly substitutable in preferences, not only attitudes to risk but also underlying preferences determine choice and therefore, a complex interaction between preferences and attititude to risk must be addressed in order to establish monotonicity of choice. Comparative static analysis is carried out with respect to changes in income, changes in uncertainty and changes in preferences and it is shown that the appropriate conditions for comparative statics are superextremal and single crossing property conditions with respect to appropriate value lattices (Antoniadou 1996). These are extensions of revealed preference conditions and in the case of a take-it-or-leave-it lottery choice, they are both necessary and sufficient. Furthermore, these conditions are implied by the standard conditions based on the Arrow-Pratt measure of absolute risk aversion in the univariate case. The case of Leontief preferences is studies extensively to demonstrate the work.

Number of Pages in PDF File: 41

Keywords: Lattice Programming, Choice under Uncertainty, Comparative Statics

JEL Classification: C61, D11, D81

working papers series





Download This Paper

Date posted: February 28, 2010  

Suggested Citation

Antoniadou, Elena, Lattices, Lotteries and Choice (February 28, 2010). Available at SSRN: http://ssrn.com/abstract=1560842 or http://dx.doi.org/10.2139/ssrn.1560842

Contact Information

Elena Antoniadou (Contact Author)
Independent ( email )
No Address Available
Feedback to SSRN


Paper statistics
Abstract Views: 234
Downloads: 62
Download Rank: 212,721
Citations:  1
Footnotes:  42

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.297 seconds