Abstract
The relationship between subjective expected utility with Bayesian updating and dynamic properties of choice has been formalized in Ghirardato (Econ Theory 83–92, 2002). In such a setup, with preferences defined over functions from states to consequences as in Savage (The foundation of statistics, 1954), strong dynamic consistency implies consequentialism. More precisely, we show that Axiom 7 in Ghirardato (Econ Theory 83–92, 2002). is redundant or alternatively dynamic consistency can be weakened while retaining the results.
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Notes
This corresponds to Axiom 2b in Ghirardato (2002).
If we were to enlarge the choice set and allow the decision maker to differentiate ex-ante between differently composed acts yielding the same consequences, the result would no longer obtain. Clearly, such preferences do not have an EU representation.
References
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Acknowledgments
We are grateful to Paolo Ghirardato and Nabil Al-Najjar for helpful comments.
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Hubmer, J., Ostrizek, F. A note on consequentialism in a dynamic Savage framework: a comment on Ghirardato (2002). Econ Theory Bull 3, 265–269 (2015). https://doi.org/10.1007/s40505-014-0057-1
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DOI: https://doi.org/10.1007/s40505-014-0057-1