Related papers: Nonlinear desirability theory
We consider a decision maker who is unaware of objects to be sampled and thus cannot form beliefs about the occurrence of particular objects. Ex ante she can form beliefs about the occurrence of novelty and the frequencies of yet to be…
Incomplete preferences provide the epistemic foundation for models of imprecise subjective probabilities and utilities that are used in robust Bayesian analysis and in theories of bounded rationality. This paper presents a simple…
Nontransitive choices have long been an area of curiosity within economics. However, determining whether nontransitive choices represent an individual's preference is a difficult task since choice data is inherently stochastic. This paper…
We propose and develop an algebraic approach to revealed preference. Our approach dispenses with non algebraic structure, such as topological assumptions. We provide algebraic axioms of revealed preference that subsume previous, classical…
Nonlinear higher order difference equations with linear arguments (containing linear forms within nonlinear maps of the space) are well-defined on Banach algebras. The scalar forms of these equations (i.e., with real variables and…
The Allais and Ellsberg paradoxes show that the expected utility hypothesis and Savage's Sure-Thing Principle are violated in real life decisions. The popular explanation in terms of 'ambiguity aversion' is not completely accepted. On the…
A demandance is a psychological "pull" exerted by a stimulus. It is closely related to the theory of "affordance". I introduce the theory of demandance, offer some motivating examples, briefly explore its psychological basis, and examine…
We develop a nonparametric approach to identify and estimate consumer preferences and unobserved heterogeneity under nonlinear price schedules. Leveraging variation across multiple price schedules, we show that both the utility function and…
Quantum cognition in decision-making is a recent and rapidely growing field. In this paper we develop an expected utility theory in a context of non-classical (quantum) uncertainty. We replace the classical state space with a Hilbert space…
Random utility theory models an agent's preferences on alternatives by drawing a real-valued score on each alternative (typically independently) from a parameterized distribution, and then ranking the alternatives according to scores. A…
The von Neumann and Morgenstern theory postulates that rational choice under uncertainty is equivalent to maximization of expected utility (EU). This view is mathematically appealing and natural because of the affine structure of the space…
We introduce a new paradigm for game theory -- Bayesian satisfaction. This novel approach is a synthesis of the idea of Bayesian rationality introduced by Aumann, and satisfaction games. The concept of Bayesian rationality for which, in…
Sets of desirable gambles constitute a quite general type of uncertainty model with an interesting geometrical interpretation. We give a general discussion of such models and their rationality criteria. We study exchangeability assessments…
This paper proposes a theory of pricing premised upon the assumptions that customers dislike unfair prices---those marked up steeply over cost---and that firms take these concerns into account when setting prices. Since they do not observe…
Assuming that agents' preferences satisfy first-order stochastic dominance, we show how the Expected Utility paradigm can rationalize all optimal investment choices: the optimal investment strategy in any behavioral law-invariant…
The von Neumann-Morgenstern (VNM) utility theorem shows that under certain axioms of rationality, decision-making is reduced to maximizing the expectation of some utility function. We extend these axioms to increasingly structured…
We identify the (filter representation of the) logic behind the recent theory of coherent sets of desirable (sets of) things, which generalise coherent sets of desirable (sets of) gambles as well as coherent choice functions, and show that…
An analyst is tasked with producing a statistical study. The analyst is not monitored and is able to manipulate the study. He can receive payments contingent on his report and trusted data collected from an independent source, modeled as a…
We develop a theory of quantum rational decision making in the tradition of Anscombe and Aumann's axiomatisation of preferences on horse lotteries. It is essentially the Bayesian decision theory generalised to the space of Hermitian…
We study a simple example of a sequential game illustrating problems connected with making rational decisions that are universal for social sciences. The set of chooser's optimal decisions that manifest his preferences in case of a constant…