Inferring Preferences from Choices Under Uncertainty

15 Pages Posted: 8 Mar 2012

See all articles by Christoph Kuzmics

Christoph Kuzmics

University of Graz - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 7, 2012

Abstract

If a decision maker, in a world of uncertainty a la Anscombe and Aumann (1963), can choose acts according to some objective probability distribution (by throwing dice for instance) from any given set of acts, then there is no set of acts that allows an experimenter to test more than the Axiom of EUOL (that the DM evaluates objective lotteries with an expected utility function). In fact there is no (common) experimental design that allows an experimenter to test more than EUOL. For any decision problem (or set of decision problems), for any preference relation that satisfies the Axiom EUOL, and for any optimal choice (or collection of choices) given this preference relation, there is another preference relation that satisfies EUOL plus the Savage axioms, for which this choice is also optimal.

Keywords: ambiguity, decision theory, Knightian uncertainty, experiments

JEL Classification: C72, C81, C90, D01, D03, D81

Suggested Citation

Kuzmics, Christoph, Inferring Preferences from Choices Under Uncertainty (March 7, 2012). Available at SSRN: https://ssrn.com/abstract=2017642 or http://dx.doi.org/10.2139/ssrn.2017642

Christoph Kuzmics (Contact Author)

University of Graz - Department of Economics ( email )

Universitaetsstrasse 15
RESOWI - F4
Graz, 8010
Austria

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