2024/06/17 by Pierre Bardier, Bach Dong-Xuan, Bardier, Pierre +3 · 1 citation
Decision Sciences · Economics, Econometrics and Finance · #Decision-Making and Behavioral Economics #Risk and Portfolio Optimization #Game Theory and Voting Systems
paper · pdf · doi:10.48550/arxiv.2406.11166
We propose and axiomatize a new model of incomplete preferences under uncertainty, hope-and-prepare preferences: one act is preferred to another if and only if both its optimistic evaluation -- the welfare level attained in the best-case scenario-- and its pessimistic evaluation --the welfare level attained in the worst-case scenario-- rank it above the other. Both evaluations are computed over sets of probability distributions. We make the case that, compared to existing incomplete criteria under ambiguity, hope-and-prepare preferences address the trade-off between conviction and decisiveness in a new way, which is more favorable to decisiveness. We characterize a completion of an incomplete hope-and-prepare preference relation admitting an (asymmetric) α-maxmin expected utility representation, in which α is unique. Conversely, given a standard α-MEU preference and a fixed value of α, we recover the concordant hope-and-prepare preference that it completes.