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Published August 9, 2017 | Submitted
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Range Convexity and Ambiguity Averse Preferences

Abstract

We show that range convexity of beliefs, a 'technical' condition that appears naturally in axiomatizations of preferences in a Savage-like framework, imposes some unexpected restrictions when modelling ambiguity averse preferences. That is, when it is added to a mild condition, range convexity makes the preferences collapse to subjective expected utility as soon as they satisfy structural conditions that are typically used to characterize ambiguity aversion.

Additional Information

This paper was circulated earlier with the title "Convex-Rangedness in Decision Making with Additive and Non-Additive Beliefs." We thank Kim Border, Itzhak Gilboa, and especially Peter Wakker for helpful comments and discussion. Marinacci gratefully acknowledges the financial support of MURST. Published as Ghirardato, P., & Marinacci, M. (2001). Range convexity and ambiguity averse preferences. Economic Theory, 17(3), 599-617.

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August 19, 2023
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