How to Make an Action Better
Abstract
For two actions in a decision problem, a and b, each of which that produces a state-dependent monetary reward, we study how to robustly make action a more attractive. Action a' improves upon a in this manner if the set of beliefs at which a is preferred to b is a subset of the set of beliefs at which a' is preferred to b, irrespective of the risk-averse agent's utility function (in money). We provide a full characterization of this relation and discuss applications in politics, bilateral trade and insurance.
- Publication:
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arXiv e-prints
- Pub Date:
- August 2024
- DOI:
- 10.48550/arXiv.2408.09294
- arXiv:
- arXiv:2408.09294
- Bibcode:
- 2024arXiv240809294P
- Keywords:
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- Economics - Theoretical Economics