2020/12/29 by Federico Echenique, Masaki Miyashita, Echenique, Federico +7 · 1 citation
Decision Sciences · Economics, Econometrics and Finance · #Auction Theory and Applications #Decision-Making and Behavioral Economics #Economic theories and models #FOS: Economics and business #Theoretical Economics (econ.TH)
paper · pdf · doi:10.48550/arxiv.2012.14557
openalex publication_date 2020/12/29 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
We propose a model of incomplete twofold multiprior preferences, in which an act f is ranked above an act g only when f provides higher utility in a worst-case scenario than what g provides in a best-case scenario. The model explains failures of contingent reasoning, captured through a weakening of the state-by-state monotonicity (or dominance) axiom. Our model gives rise to rich comparative statics results, as well as extension exercises, and connections to choice theory. We present an application to second-price auctions.