# Sequential decision making without independence: a new conceptual approach

## Abstract

This paper presents a critical reflection on dynamic consistency as commonly used in economics and decision theory, and on the difficulty to test it experimentally. It distinguishes between the uses of the term dynamic consistency in order to characterize two different properties: the first accounts for the neutrality of individual preferences towards the timing of resolution of uncertainty whereas the second guarantees that a strategy chosen at the beginning of a sequential decision problem is immune to any reevaluation and will effectively be implemented from then on in the decision problem. Although these two properties are equivalent under expected utility (EU), this is not the case under non-EU. Building on the possible characteristics of individual dynamic preferences under risk, this paper proposes a conceptual categorization, that is experimentally testable, of possible sequential decision making behaviors of non-EU maximizers.

## Keywords

Risk Independence axiom Dynamic consistency Consequentialism Sequential decision making## JEL Classification

C91 D81## Notes

### Acknowledgments

I am deeply grateful to Jean-Yves Jaffray for his precious help, advises and support on this work. I am also grateful to Brian Hill, Chris Starmer, and Marc Willinger, to participants in conferences in Chicago, Paris and Bilbao and in seminars in University of Queensland and Aix-Marseille School of Economics for their helpful comments. I also thank an anonymous referee for his constructive comments and suggestions on earlier drafts of this paper.

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