Indecisiveness aversion and preference for commitment

We present an axiomatic model of preferences over menus that is motivated by three assumptions. First, the decision maker is uncertain ex ante (i.e., at the time of choosing a menu) about her ex post (i.e., at the time of choosing an option within her chosen menu) preferences over options, and she anticipates that this subjective uncertainty will not resolve before the ex post stage. Second, she is averse to ex post indecisiveness (i.e., to having to choose between options that she cannot rank with certainty). Third, when evaluating a menu she discards options that are dominated (i.e., inferior to another option whatever her ex post preferences may be) and restricts attention to the undominated ones. Under these assumptions, the decision maker has a preference for commitment in the sense of preferring menus with fewer undominated alternatives. We derive a representation in which the decision maker’s uncertainty about her ex post preferences is captured by means of a subjective state space, which in turn determines which options are undominated in a given menu, and in which the decision maker fears, whenever indecisive, to choose an option that will turn out to be the worst (undominated) one according to the realization of her ex post preferences.     

Testing transitivity in choice under risk

Recently proposed models of risky choice imply systematic violations of transitivity of preference. This study explored whether people show the predicted intransitivity of the two models proposed to account for the certainty effect in Allais paradoxes. In order to distinguish “true” violations from those produced by “error,” a model was fit in which each choice can have a different error rate and each person can have a different pattern of preferences that need not be transitive. Error rate for a choice is estimated from preference reversals between repeated presentations of the same choice. Results showed that few people repeated intransitive patterns. We can retain the hypothesis that all participants were transitive.     

Stochastic revealed preference and rationalizability

This article explores rationalizability issues for finite sets of observations of stochastic choice in the framework introduced by Bandyopadhyay et al. (Journal of Economic Theory, 84(1), 95–110, 1999). It is argued that a useful approach is to consider indirect preferences on budgets instead of direct preferences on commodity bundles. A new rationalizability condition for stochastic choices, “rationalizable in terms of stochastic orderings on the normalized price space” (rsop), is defined. rsop is satisfied if and only if there exists a solution to a linear feasibility problem. The existence of a solution also implies rationalizability in terms of stochastic orderings on the commodity space. Furthermore it is shown that the problem of finding sufficiency conditions for binary choice probabilities to be rationalizable bears similarities to the problem considered here.     

Plurality Rule Works In Three-Candidate Elections

In the citizen–candidate approach each citizen chooses whether or not to run as candidate. In a single-peaked preference domain, we find that the strategic entry decision of the candidates eliminates one of the most undesirable properties of Plurality rule, namely to elect a poor candidate in three-candidate elections since as we show, the Condorcet winner among the self-declared candidates is always elected. We find that the equilibria with three candidates are basically 2-fold, either there are two right-wing candidates and a left-wing candidate who wins the elections (or its symmetric), or there is a right-wing candidate, a left-wing candidate, and a candidate located in between the two others who becomes winner. We also show that when four or more candidates enter the contest, Plurality rule can elect the Condorcet-loser among the self-declared candidates.      

On Preference and Freedom

We consider the role of preferences in the assessment of an agent's freedom, visualized as the opportunity for choice. After discussing several possible intuitive approaches to the problem, we explore an approach based on the notion of preference orderings that a reasonable person may possibly have. Using different sets of axioms, we characterize the rules for ranking opportunity sets in terms of freedom. We also show that certain axioms for ranking opportunity sets are incompatible.     

On the stability of a triplet of scoring rules

When choosing a voting rule to make subsequent decisions, the members of a committee may wish this rule to be self-selected when it is the object of a choice among a menu of different possible voting rules. Such concepts have recently been explored in Social Choice theory, and a menu of voting rule is said to be stable if it contains at least one self-selective voting rule at each profile of preferences on voting rules. We consider in this article the menu constituted by the three well-known scoring rules {Borda, Plurality, and Antiplurality}. Under the Impartial Culture assumption, which proposes an a priori model to estimate the likelihood of the profiles, we will derive a probability for the stability of this triplet of voting rules.     

The Deep Side of Preference Theory

An individual is said to have a taste for a particular menu, i.e. a subset of available commodities, if he is indifferent between all commodity bundles that contain the same quantity for each commodity which actually is in the menu, whatever the rest of the bundle. Then, a taste is directly defined as a deep property of preferences. As a first result, it is shown that a complete and transitive preference relation over the commodity bundles is equivalent to regular tastes where regularity means that tastes can be derived from a pure qualitative relation between the different commodities. Besides, a preference family based on preference relations corresponding to each particular commodity is said to be rationalizable if there exists a metapreference over commodity bundles which consistently summarizes the preference family and then allows to decide. As a second result, it is shown that if a preference family is rationalizable, then the tastes are organized thanks to a reflexive and transitive qualitative relation between the different commodities.     

Equivalent comparisons of information channels

This article constructs a static model of information acquisition when the agent does not know exactly what pieces of information he is missing. A representation of preferences over information channels and menus of lotteries is shown by adapting the model of unforeseen contingencies by Dekel et al. (Econometrica 69:891–934, 2001; Econometrica 75:591–600, 2007), which is an extension of Kreps (Econometrica 47:565–576, 1979; Economic analysis of markets and games: essays in honor of Frank Hahn, 1992). Also, characterisation of informativeness of an information channel analogous to the one by Blackwell (Ann Math Stud 24:265–272, 1953) is examined in conjunction with the preference for flexibility by applying the structure of Shapley value.     

The individual rationality of maintaining a sense of justice

Let us say that an individual possesses aprincipled preference if she prefers satisfying her preferences without violating the principles of justice governing her community to satisfying her preferences by violating these principles. Although living among possessors of principled preferences benefits individuals, maintaining such a preference is individually costly. Further, individuals can benefit from others possessing principled preferences without themselves possessing one. In this paper, I argue that occupying a choice situation which mirrors key aspects of our own situation, maximizing rationality requires individuals to develop and maintain principled preferences.To establish that maintaining a principled preference is individually rational for the occupants of such a choice situation, I define a range of individual strategies for them, model their choice of individual strategies as a game, and argue that this game involves an equilibrium in which all of its participants would choose to develop and maintain a principled preference.     

Even-chance lotteries in social choice theory

This paper discusses aspects of the theory of social choice when a nonempty choice set is to be determined for each situation, which consists of a feasible set of alternatives and a preference order for each voter on the set of nonempty subsets of alternatives. The individual preference assumptions include ordering properties and averaging conditions, the latter of which are motivated by the interpretation that subset A is preferred to subset B if and only if the individual prefers an even-chance lottery over the basic alternatives in A to an even-chance lottery over the basic alternatives in B. Corresponding to this interpretation, a choice set with two or more alternatives is resolved by an even-chance lottery over these alternatives. Thus, from the traditional no-lottery social choice theory viewpoint, ties are resolved by even-chance lotteries on the tied alternatives. Compared to the approach which allows all lotteries to compete along with the basic alternatives, the present approach is a contraction which allows only even-chance lotteries.After discussing individual preference axioms, the paper examines Pareto optimality for nonempty subsets of a feasible set in a social choice context with n voters. Aspects of simple-majority comparisons in the even-chance context follow, including an analysis of single-peaked preferences. The paper concludes with an Arrowian type impossibility theorem that is designed for the even-chance setting.     

Noise and bias in eliciting preferences

In the context of eliciting preferences for decision making under risk, we analyse the features of four different elicitation methods—pairwise choice, willingness-to-pay, willingness-to-accept, and the Becker-DeGroot-Marschak mechanism—and estimate noise, bias and risk attitudes for two different preference functionals, Expected Utility and Rank-Dependent Expected Utility. It is well-known that methods differ in terms of the bias in the elicitation; it is rather less well-known that methods differ in terms of their noisiness. It has also been reported that risk attitudes are not stable across different elicitation methods. Our results suggest that elicited preferences should only be used in the context in which they were elicited, and the bias in the certainty-equivalent methods should be kept in mind when making predictions based on the elicited preferences. Moreover, conclusions should be moderated to take into account the various methods’ noise, which is generally lowest in the case of pairwise choice.     

Ordinal preference representations

Ordinal preferences have several advantages over the traditional cardinal expressions of preference. Three different representations of ordinal preferences useful in multi-participant modelling are presented, and their features compared. One approach is thepayoff representation that is based on an ordinal normal form game. A second representation of ordinal preferences is thepreference vector, based on the option form of the game. The option form consists of a list of players, with each player followed by the options under its control. The third representation of ordinal preferences is thepreference tree. A preference tree is an implied binary tree that captures the information of preference vector in a more compact manner by making use of its lexicographic structure. The preference tree offers considerable compactness and computational efficiency over the other two approaches.     

An experimental investigation of violations of transitivity in choice under uncertainty

Several models of decision-making imply systematic violations of transitivity of preference. Our experiments explored whether people show patterns of intransitivity predicted by regret theory and majority rule. To distinguish “true” violations from those produced by “error,” a model was fit in which each choice can have a different error rate and each person can have a different pattern of true preferences that need not be transitive. Error rate for a choice is estimated from preference reversals between repeated presentations of that same choice. Our results showed that very few people repeated intransitive patterns. We can retain the hypothesis that transitivity best describes the data of the vast majority of participants.

Preference and choice

A theory of preference and choice based on that of von Wright is developed whereby the choice of a state of affairs is determined by preferences between pairs of them. The method used is letting preferences eliminate states of affairs from the choice set according to axiomatized rules. Formal properties of extensions of von Wright's preference logic are investigated.     

Eliciting beliefs

We develop an algorithm that can be used to approximate a decisionmaker’s beliefs for a class of preference structures that includes, among others, α-maximin expected utility preferences, Choquet expected utility preferences, and, more generally, constant additive preferences. For both exact and statistical approximation, we demonstrate convergence in an appropriate sense to the true belief structure.     

Satisfaction and preferences in a legality social dilemma: Does corporate social responsibility impact consumers’ behaviour?

We investigate players’ preferences in a multiplayer prisoner's dilemma by comparing results from satisfaction-based and a choice-based approach by means of a laboratory experiment. The experimental design tests the effects of the legality rating frame on consumers’ choice between products from producers labeled by the legality rating and products by unlabeled producers. Both approaches provide strong evidence of preference heterogeneity, with players who cooperate above median being less affected in their choice by monetary payoffs vis-à-vis the public good component. The empirical findings support the hypothesis of our theoretical model that (part of the) players have, in addition to the standard self-interest component, an other-regarding preference argument that is further satisfied in the legality frame plus conformity design.A policy suggestion stemming from our experiment is based on the fact that corporate social responsibility legality frames and culture have a significant effect on an important portion of consumers. These consumers reveal that the often-declared willingness to pay for socially, environmentally and legally responsible features of products is confirmed by actual purchases of more expensive responsible products. Governments should therefore promote the creation of legality rating schemes with well-defined pre-established rules such as in the Italian case.     

Analysis of Choice Expectations in Incomplete Scenarios

This paper studies the use of probabilistic expectations data to predict behavior in incomplete scenarios posed by the researcher. The information that respondents have when replying to questions posing incomplete scenarios is a subset of the information that they would have in actual choice settings. Hence such questions do not elicit pure statements of preference; they elicit preferences mixed with expectations of future events that may affect choice behavior. The analysis developed here assumes respondents recognize that their behavior may depend on information they do not have when expectations are elicited, and that they answer coherently and honestly given the information provided. The objective in imagining such ideal respondents is to place a logical upper bound on the predictive content of elicited choice expectations.     

Are risk preferences stable? Comparing an experimental measure with a validated survey-based measure

We examine the stability of risk preference within subjects by comparing measures obtained from two elicitation methods, an economics experiment with real monetary rewards and a survey with questions on hypothetical gambles. The survey questions have been validated by numerous empirical studies of investment, insurance demand, smoking and alcohol use, and recent studies have shown the experimental measure is associated with several real-world risky behaviors. For the majority of subjects, we find that risk preferences are not stable across elicitation methods. In interval regression models subjects’ risk preference classifications from survey questions on job-based gambles are not associated with risk preference estimates from the experiment. However, we find that risk classifications from inheritance-based gambles are significantly associated with the experimental measure. We identify some subjects for whom risk preference estimates are more strongly correlated across elicitation methods, suggesting that unobserved subject traits like comprehension or effort influence risk preference stability.     

Internal slackening scoring methods

We deal with the ranking problem of the nodes in a directed graph. The bilateral relationships specified by a directed graph may reflect the outcomes of a sport competition, the mutual reference structure between websites, or a group preference structure over alternatives. We introduce a class of scoring methods for directed graphs, indexed by a single nonnegative parameter α. This parameter reflects the internal slackening of a node within an underlying iterative process. The class of so-called internal slackening scoring methods, denoted by λ ^α , consists of the limits of these processes. It is seen that λ⁰ extends the invariant scoring method, while λ ^∞ extends the fair bets scoring method. Method λ¹ corresponds with the existing λ-scoring method of Borm et al. (Ann Oper Res 109(1):61–75, 2002) and can be seen as a compromise between λ⁰ and λ ^∞ . In particular, an explicit proportionality relation between λ ^α and λ¹ is derived. Moreover, the internal slackening scoring methods are applied to the setting of social choice situations where they give rise to a class of social choice correspondences that refine both the Top cycle correspondence and the Uncovered set correspondence.