nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2008‒10‒13
two papers chosen by
Philip Yu
Hong Kong University

  1. Partial Prescriptions For Decisions With Partial Knowledge By Charles F. Manski
  2. Eliciting preferences on multiattribute societies with a Choquet integral By Patrick Meyer; Grégory Ponthière

  1. By: Charles F. Manski
    Abstract: This paper concerns the prescriptive function of decision analysis. I suppose that an agent must choose an action yielding welfare that varies with the state of nature. The agent has a welfare function and beliefs, but he does not know the actual state of nature. It is often argued that such an agent should adhere to consistency axioms which imply that behavior can be represented as maximization of expected utility. However, our agent is not concerned the consistency of his behavior across hypothetical choice sets. He only wants to make a reasonable choice from the choice set that he actually faces. Hence, I reason that prescriptions for decision making should respect actuality. That is, they should promote welfare maximization in the choice problem the agent actually faces. I conclude that any decision rule respecting weak and stochastic dominance should be considered rational. Expected utility maximization respects dominance, but it has no special status from the actualist perspective. Moreover, the basic consistency axiom of transitivity has a clear normative foundation only when actions are ordered by dominance.
    JEL: D81
    Date: 2008–10
  2. By: Patrick Meyer; Grégory Ponthière
    Abstract: This paper aims at reexamining the construction of indicators of standards of living, by focussing on the challenges raised by the subjectivity and the multidimensionality of living conditions. For that purpose, we propose to apply Choquet integral-based multiattribute value theory to the elicitation, from rankings of multiattribute hypothetical societies, of individual's preferences on different dimensions of living conditions. A simple application of the proposed approach highlights the existence of complementarities and redundancies between different dimensions of standards of living, and reveals a strong heterogeneity of individual preferences on hypothetical societies. We explore also how elicited preferences can be used to cast a new light on the ranking of actual multiattribute societies.
    Date: 2008

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