| Preference for Exibility Over Many Periods. (1998) | |||||||||||||
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| We consider the extension of the classical problem of preference for exibility to many periods. Preferences are dened over sets of innite paths of choices. The main result provides a set of axioms on preferences that yield an additive representation over a subjective state space. This space is the set of preferences over choice today and feasible set tomorrow. The main new axiom, policy dominance, is a stronger form of the assumption of monotonicity. The author wishes to thank Eddie Dekel, David Kreps, Bart Lipman, Salvatore Modica, Jean-Francois Mertens, Peter Wakker for illuminating conversations. 1 1 Introduction Flexibility is the luxury of a second thought, the ability of revising one's previous plans, or even leaving them vague, until the time to choose comes. This luxury, however, comes with a cost that an individual would not want to bear without a good reason. Why exibility? In a deterministic world, a rational individual who has a perfect understanding of the world he ... | |||||||||||||
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