Schumpeter Lecture 2023: Rationality and Zero Risk

• 成果类型: Article
• 署名作者: Gilboa, Itzhak; Minardi, Stefania; Wang, Fan
• 署名单位: Hautes Etudes Commerciales (HEC) Paris; Reichman University; ESSEC Business School
• 刊物名称: JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
• ISSN/ISSBN: 1542-4766
• DOI: 10.1093/jeea/jvad071
• 发表日期: 2024
• 页码: 1-33
• 关键词: decision

摘要

We adopt a definition of rationality as robustness to analysis: A mode of behavior is rational for a decision maker if she feels comfortable with it once it has been analyzed and explained to her. With this definition in mind, is it irrational to violate continuity axioms in one's stated preferences? Specifically, does it make sense to avoid any positive probability of a negative outcome, no matter how small? Or, if a decision maker states such a zero risk policy, does she mean what she says? We propose to study this question axiomatically, asking which modes of behavior correspond to such statements. The baseline model evaluates a lottery by its expected utility and an extra additive term that measures the cost of deviating from a zero risk choice. A generalized version allows for multiple sets of principles, where the cost of risking a set of principles is added to the expected utility of a lottery. Stronger assumptions imply that the cost of violating a set of principles is additive in the individual costs. We develop a comparative behavioral analysis that allows making interpersonal comparisons about the relative importance of principles.