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Full-Text Articles in Social and Behavioral Sciences
Preference For Information And Dynamic Consistency, Simon Grant, Atsushi Kajii, Ben Polak
Preference For Information And Dynamic Consistency, Simon Grant, Atsushi Kajii, Ben Polak
Cowles Foundation Discussion Papers
We provide necessary and sufficient conditions for a dynamically consistent agent always to prefer more informative signals (in single-agent problems). These conditions do not imply recursivity, reduction or independence. We provide a simple definition of dynamically consistent behavior, and we discuss whether an intrinsic information lover (say, an anxious person) is likely to be dynamically consistent.
Decomposable Choice Under Uncertainty, Simon Grant, Atsushi Kajii, Ben Polak
Decomposable Choice Under Uncertainty, Simon Grant, Atsushi Kajii, Ben Polak
Cowles Foundation Discussion Papers
Savage motivated his Sure Thing Principle by arguing that, whenever an act would be preferred if an event obtains and preferred if that event did not obtain, then it should be preferred overall. The idea that it should be possible to decompose and recompose decision problems in this way has normative appeal. We show, however, that it does not require the full separability across events implicit in Savage’s axiom. We formulate a weaker axiom that suffices for decomposability, and show that this implies an implicit additive representation. Our decomposability property makes local necessary conditions for optimality, globally sufficient. Thus, it …