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Range Convexity and Ambiguity Averse Preferences

Ghirardato, Paolo and Marinacci, Massimo (2000) Range Convexity and Ambiguity Averse Preferences. Social Science Working Paper, 1081. California Institute of Technology , Pasadena, CA. (Unpublished)

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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.

Item Type:Report or Paper (Working Paper)
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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.
Group:Social Science Working Papers
Funding AgencyGrant Number
Ministero dell'Università e della Ricerca Scientifico-Tecnologica (MURST)Cofin2000
Subject Keywords:Ambiguity Aversion, Biseparable Preferences, Choquet Expected Utility, Maxmin Expected Utility, Range Convexity
Series Name:Social Science Working Paper
Issue or Number:1081
Classification Code:JEL: D81
Record Number:CaltechAUTHORS:20170808-163116323
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79983
Deposited By: Jacquelyn Bussone
Deposited On:09 Aug 2017 16:52
Last Modified:03 Oct 2019 18:26

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