On the indifference relation in Bewley preferences
Abstract
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.
Citation
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
Publication
Economics Letters
Status
Peer reviewed
ISSN
0165-1765Type
Journal article
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