On the indifference relation in Bewley preferences
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Bewley’s (2002) influential model of preferences over uncertain prospects features an incomplete preference relation and a set of priors over the states of the world such that one act is preferred to another if and only if its expected utility is higher under every prior in that set. This note shows that, under general conditions on preferences, the decision maker in the Bewley model cannot be indifferent between distinct monetary acts whenever the set of priors is fully-dimensional. In the special case of two states, in particular, such “objectively rational” preferences are incomplete if and only if the indifference relation is trivial in the above sense.
Gerasimou , G 2018 , ' On the indifference relation in Bewley preferences ' Economics Letters , vol. 164 , pp. 24-26 . https://doi.org/10.1016/j.econlet.2017.12.037
© 2017 Elsevier B. V. This work has been made available online in accordance with the publisher’s policies. This is the author created, accepted version manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at https://doi.org/10.1016/j.econlet.2017.12.028
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