Dynamic consistency implies approximately expected utility preferences

Kim C. Border, Uzi Segal

Research output: Contribution to journalArticlepeer-review

Abstract

Machina has proposed a definition of dynamic consistency which admits non-expected utility functionals. We show that even under this new definition a dynamically consistent preference relation that is differentiable becomes arbitrarily close to an expected utility preference after the realization of a low probability event. Journal of Economic Literature Classification Number: D81.

Original languageEnglish
Pages (from-to)170-188
Number of pages19
JournalJournal of Economic Theory
Volume63
Issue number2
DOIs
StatePublished - Aug 1994
Externally publishedYes

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