Dynamic Consistency with Preferential Gaps
Aumann influentially claimed that the completeness axiom in utility theory is neither descriptively accurate nor normatively compelling. Separately, it’s commonly accepted that dynamic consistency in individual decision-making is a demand of rationality. I prove the following three results. First, even when incomplete preferences are acyclic, standard Maximal choice and backward induction are insufficient to guarantee dynamic consistency. Second, there exists a rationalising (dynamic) choice rule that does guarantee dynamic consistency, including under uncertainty, without imposing transitivity. Finally, it’s possible to bound above the extent to which this rule can lead the behaviour of such agents to be rationalisable by a complete preference relation.
Date: 16 February 2024, 11:45 (Friday, 5th week, Hilary 2024)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room E or https://zoom.us/j/96595245637?pwd=dEdBSGpXN0xoNEdhSUs4Z3JlVHl3dz09
Speaker: Sami Petersen (University of Oxford)
Organising department: Department of Economics
Part of: Student Research Workshop in Micro Theory
Booking required?: Not required
Audience: Members of the University only
Editor: Edward Clark