An Explicit Representation for Disappointment Aversion and Other Betweenness Preferences

41 Pages Posted: 19 Sep 2018

See all articles by Simone Cerreia-Vioglio

Simone Cerreia-Vioglio

Bocconi University - Department of Decision Sciences

David Dillenberger

University of Pennsylvania - Department of Economics

Pietro Ortoleva

Princeton University - Department of Economics

Date Written: September 19, 2018

Abstract

One of the most well-known models of non-expected utility is Gul (1991)’s model of Disappointment Aversion. This model, however, is defined implicitly, as the solution to a functional equation; its explicit utility representation is unknown, which may limit its applicability. We show that an explicit representation can be easily constructed, using solely the components of the implicit one. We also provide a more general result: an explicit representation for preferences in the Betweenness class that also satisfy Negative Certainty Independence (Dillenberger, 2010).

Keywords: D80, D81

JEL Classification: Betweenness, Cautious Expected Utility, Disappointment Aversion, Utility representation

Suggested Citation

Cerreia-Vioglio, Simone and Dillenberger, David and Ortoleva, Pietro, An Explicit Representation for Disappointment Aversion and Other Betweenness Preferences (September 19, 2018). PIER Working Paper No. 18-019. Available at SSRN: https://ssrn.com/abstract=3252009 or http://dx.doi.org/10.2139/ssrn.3252009

Simone Cerreia-Vioglio

Bocconi University - Department of Decision Sciences ( email )

Via Roentgen 1
Milan, 20136
Italy

David Dillenberger (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-1503 (Phone)

Pietro Ortoleva

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

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