Transitive Regret Over Statistically Independent Lotteries
University of California, Los Angeles - Anderson School of Management
Boston College - Department of Economics
March 31, 2012
Preferences may arise from regret, i.e., from comparisons with alternatives forgone by the decision maker. We show that when the choice set consists of pairwise statistically independent lotteries, transitive regret-based behavior is consistent with betweenness preferences and with a family of preferences that is characterized by a consistency property. Examples of consistent preferences include CARA, CRRA, and anticipated utility.
Number of Pages in PDF File: 17
Keywords: regret, transitivity, non-expected utility
JEL Classification: D81
Date posted: April 19, 2012
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