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On the indifference relation in Bewley preferences

Author

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  • Gerasimou, Georgios
Abstract
Bewley’s (2002) influential model of preferences over uncertain prospects features an incomplete preference relation and a set of priors over the states of the world such that one act is preferred to another if and only if its expected utility is higher under every prior in that set. This note shows that, under general conditions on preferences, the decision maker in the Bewley model cannot be indifferent between distinct monetary acts whenever the set of priors is fully-dimensional. In the special case of two states, in particular, such “objectively rational” preferences are incomplete if and only if the indifference relation is trivial in the above sense.

Suggested Citation

  • Gerasimou, Georgios, 2018. "On the indifference relation in Bewley preferences," Economics Letters, Elsevier, vol. 164(C), pages 24-26.
    • Handle: RePEc:eee:ecolet:v:164:y:2018:i:c:p:24-26
    DOI: 10.1016/j.econlet.2017.12.037
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    References listed on IDEAS

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    3. Quartieri, Federico, 2022. "A unified view of the existence of maximals," Journal of Mathematical Economics, Elsevier, vol. 99(C).

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    More about this item

    Keywords

    Bewley preferences; Incomplete preferences; Monetary acts; Trivial indifference relation;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D10 - Microeconomics - - Household Behavior - - - General

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