Preference for flexibility in infinite horizon problems

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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 languageEnglish (US)
Pages (from-to)677-702
Number of pages26
JournalEconomic Theory
Issue number4
StatePublished - 2002


  • Dynamic programming
  • Preference for flexibility
  • Unforeseen contingencies


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