Abstract
We consider the extension of the classical problem of preference for flexibility to many periods. Preferences are defined over sets of infinite paths of choices. The main result provides a set of axioms on preferences that yield an additive representation over a subjective state space. This space is the set of preferences over choice today and feasible set tomorrow. The main new axiom, stochastic dominance, is a stronger form of the assumption of monotonicity.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 677-702 |
| Number of pages | 26 |
| Journal | Economic Theory |
| Volume | 20 |
| Issue number | 4 |
| DOIs | |
| State | Published - 2002 |
Keywords
- Dynamic programming
- Preference for flexibility
- Unforeseen contingencies