Lexicographic expected utility with a subjective state space

Youichiro Higashi, Kazuya Hyogo

Research output: Contribution to journalArticle

Abstract

This paper provides a model that allows for a criterion of admissibility based on a subjective state space. For this purpose, we build a non-Archimedean model of preference with subjective states, generalizing Blume et al. (Econometrica 59:61-79, 1991), who present a non-Archimedean model with exogenous states; and Dekel et al. (Econometrica 69:891-934, 2001), who present an Archimedean model with an endogenous state space. We interpret the representation as modeling an agent who has several "hypotheses" about her state space, and who views some as "infinitely less relevant" than others.

Original languageEnglish
Pages (from-to)175-192
Number of pages18
JournalEconomic Theory
Volume49
Issue number1
DOIs
Publication statusPublished - Jan 1 2012

Keywords

  • Admissibility
  • Lexicographic expected utility
  • Non-Archimedean preferences
  • Subjective state space

ASJC Scopus subject areas

  • Economics and Econometrics

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