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Please use this identifier to cite or link to this item: http://hdl.handle.net/2262/58935

Title: Evaluating opportunities when people are uncertainty averse
Author: Gekker, Ruvin
Piggins, Ashley
Keywords: Individual choice
Axioms
Uncertainty
Issue Date: 2009
Publisher: Economic & Social Research Institute
Citation: Gekker, Ruvin; Piggins, Ashley. 'Evaluating opportunities when people are uncertainty averse'. - Economic & Social Review, Vol. 40, no. 1, Spring, 2009, pp. 109–116, Dublin: Economic & Social Research Institute
Abstract: We consider the problem of ranking sets of alternatives. Standard approaches to this problem regard the addition of an alternative to a set containing one element as enhancing choice. We argue that this monotonicity axiom may not be desirable when an agent is uncertain as to the value of this additional alternative. We replace monotonicity with an uncertainty aversion axiom, and also introduce an axiom that produces lexicographic behaviour. These axioms, in conjunction with an independence axiom, enable us to prove a characterisation theorem. This theorem says that sets are ranked in terms of the number of uncertain elements that they contain, the fewer the better. This is the only ranking rule that satisfies our axioms.
Description: Paper delivered at the Twenty-Second Annual Conference of the Irish Economic Association, Westport, Co. Mayo, 25-27 April, 2008
URI: http://hdl.handle.net/2262/58935
ISSN: 00129984
Appears in Collections:Economic and Social Review Archive: Complete Collection 1969-
The Economic and Social Review, Vol. 40, No. 1, Spring, 2009

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