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Papers by Madhav Chandrasekher

Research paper thumbnail of Lexicographic Multiple Prior Preferences

This paper introduces and axiomatizes lexicographic multiple prior preferences. Our model general... more This paper introduces and axiomatizes lexicographic multiple prior preferences. Our model generalizes lexicographic subjective expected utility (LSEU) (see, e.g. Blume et al. (1991a)) by allowing for uncertainty (i.e. multiple priors) in each step of the ordered chain of beliefs. This extends the applicability of lexicographic choice procedures to settings with payoff uncertainty. We give two such applications. The first is a signaling model, where the uncertainty is about the payoff types of players. The second is a problem of insurance under uncertainty, where the uncertainty is about endowments.

Research paper thumbnail of Discrete models of menu choice

... 'We have borrowed this term from papers by Jawwad Noor. ... For each x GM,, define t... more ... 'We have borrowed this term from papers by Jawwad Noor. ... For each x GM,, define the lower bound-ary for u(x,Mi) to be LB(x,Mi) := msK{(XtM)\McMitMe$(n)}u(x>M)- Put 6It is easy to extend the given argument to the case where there may be indifferences between menus of the ...

Research paper thumbnail of Temptation and Subjective Feasibility

This paper develops a new model of menu choice induced by temptation. The presence of temptation ... more This paper develops a new model of menu choice induced by temptation. The presence of temptation creates a utility cost in that choices cannot be recovered by maximization of consumption utility. However, in our model the cost of temptation is borne through constraints on the DM’s choice domain as opposed to an explicit cost function. The idea is that, within menu, objects are grouped together by attribute and the DM is only able to select an attribute possessed by a target choice, as opposed to selecting the choice itself. For example, when the DM looks at a dinner menu he can partly control himself by looking at the low-calorie portion of the menu, but within this subset he might be drawn to the most tempting option. The main feature of our model is the manner in which choices are grouped by attributes, we refer to these as categories. Categories are subjective, so that the exercise of the paper is to show how these can be elicited and identified from choices over menus.

Research paper thumbnail of Dual-self Representations of Ambiguity Preferences

SSRN Electronic Journal

We propose a class of multiple-prior representations of preferences under ambiguity, where the be... more We propose a class of multiple-prior representations of preferences under ambiguity, where the belief the decision-maker (DM) uses to evaluate an uncertain prospect is the outcome of a game played by two conflicting forces, Pessimism and Optimism. The model does not restrict the sign of the DM's ambiguity attitude, and we show that it provides a unified framework through which to characterize different degrees of ambiguity aversion, and to represent the coexistence of negative and positive ambiguity attitudes within individuals as documented in experiments. We prove that our baseline representation, dual-self expected utility (DSEU), yields a novel representation of the class of invariant biseparable preferences (Ghirardato, Maccheroni, and Marinacci, 2004), which drops uncertainty aversion from maxmin expected utility (Gilboa and Schmeidler, 1989). Extensions of DSEU allow for more general departures from independence.

Research paper thumbnail of An Axiomatic Analysis of Planner-Doer Games

SSRN Electronic Journal

Planner-doer games, introduced in Thaler and Shefrin (1981), are frequently used to model decisio... more Planner-doer games, introduced in Thaler and Shefrin (1981), are frequently used to model decision-makers with self-control problems. In such games, the planner moves first by making a strategic commitment which partially restricts the doer's choices and the doer follows by making a consumption choice. The game itself is a subjective construct, meaning that neither the preferences of the players nor the planner’s commitment strategies are necessarily observable. However, when commitment strategies only allow partial control of the doer there is - in principle - an observable preference for external commitment, i.e. a preference over menus. The contribution of this paper is that we use preferences over menus to elicit and partially identify a class of planner-doer games.

Research paper thumbnail of Incomplete Menu Preference and Ambiguity

SSRN Electronic Journal

This paper studies a problem of choice under uncertainty in which a decision-maker's (DM) cho... more This paper studies a problem of choice under uncertainty in which a decision-maker's (DM) choices randomly map to consumption outcomes. The primitive is a binary relation on menus, where a menu is a set of possible ex post outcomes. After the DM selects a menu, nature (not the DM) makes a consumption choice from the menu. Nature's choice function is subject to uncertainty, so that the choice of a particular menu yields a distribution over the ex post outcomes supported by that menu. Hence, from the DM’s view, by choosing a menu it is as if he is choosing a distribution over ex post outcomes. The main result provides axiomatic foundations for a menu-choice analogue of the Bewley model of Knightian uncertainty.

Research paper thumbnail of Dynamically consistent voting rules

Journal of Economic Theory, 2015

This paper studies families of social choice functions (SCF's), i.e. a collection of social choic... more This paper studies families of social choice functions (SCF's), i.e. a collection of social choice functions {Φ A }, where the family is indexed by the option set of choices. These (sets of) functions arise in sequential choice problems where at each stage a set of options is given to a population of voters and a choice rule must aggregate stated preferences to generate an aggregate choice. In such settings, the aggregate decision-making process should reflect some form of consistency across choice problems. We characterize the class of (sequences of) SCF's that satisfy two properties: (i) strategy-proofness and (ii) a notion of dynamic consistency inspired by Sen's α from choice theory. When the aggregate choice is anonymous, this class turns out to be exactly the set of q-rules, i.e. rules in which the selected alternative is the most preferred alternative of the voter at the q-th N-tile of the population (where N is the set of voters). This nests median voter schemes when no phantom voters are admitted in the decision rule. Without anonymity we obtain a class that we call "vote-by-committee" rules, the name due to some similarities with a class of SCF's axiomatized in Barberá et al. (1991).

Research paper thumbnail of A Theory of Local Menu Preferences

This paper develops a theory of choice in which the constraints of a decision problem influence t... more This paper develops a theory of choice in which the constraints of a decision problem influence the decision-maker's preferences over the objects of choice. We use the framework of menu choice to model this idea. In this setting, the menu is the constraint and the objects of choice are the elements in the menu. Most papers in the menu choice literature assume that the decision-maker (DM) implicitly formulates a state-dependent ranking over all elements of the consump-tion space prior to evaluating the utility of any given menu. Thus, the decision maker behaves as if his domain of choice is the full space of menus. In this paper, we model decision-makers who behave as if they do not control the menu (i.e. the constraints) they are given, and hence evaluate each menu as a context-dependent choice problem. Menu preferences that exhibit this context-dependence are called local menu preferences. We give a definition of context-dependence and provide an axiomatic model of context-depe...

Research paper thumbnail of Generalized Preference for Flexibility

This paper provides a new representation theorem for the class of menu preferences that satisfy o... more This paper provides a new representation theorem for the class of menu preferences that satisfy only the order and monotonicity axioms. The utility function we axiomatize nests both the model for preference for flexibility in Kreps (1979) and a model of local preference for flexibility introduced in a companion paper, Discrete Models of Unforeseen Contingencies.

Research paper thumbnail of Incomplete Menu Preferences and Ambiguity

This paper models decision problems where the decision-maker (DM) may not be able to compare two ... more This paper models decision problems where the decision-maker (DM) may not be able to compare two risky acts. Incomparability of acts can, in prin-ciple, stem from two sources. First, perception of risk is subjective and the DM might have only a coarse assessment of the probability measure over the space of ex post outcomes that determine the values of the acts. Second, there may be co-dependence on the realized outcome and the set of the consumption choices that are available conditional on that outcome. Existing models of incomplete preferences, which build on Bewley's (1986) model of Knightian Uncertainty, accommodate the first consideration, but foreclose the second possibility as a source of incompleteness. This paper presents an axiomatic model of incomplete preferences that accounts for both of these possibilities as a source of incompleteness.

Research paper thumbnail of A Theory of Temptation without Uncertainty

This paper studies menu choice problems in which the decision maker faces no ex ante uncertainty ... more This paper studies menu choice problems in which the decision maker faces no ex ante uncertainty about her ex post preferences, yet nevertheless ex-hibits non-trivial menu preferences due to the presence of self-control problems. We introduce a new class of utilities which generalize the Gul-Pesendorfer (2001, 2005) 'No Self-Control' model. The main results in the paper provide utility rep-resentation theorems for this class of utilities.

Research paper thumbnail of Discrete Models of Unforeseen Contingencies

This paper introduces the notion of menu-dependent preferences into the two-period menu choice co... more This paper introduces the notion of menu-dependent preferences into the two-period menu choice context first studied by Kreps (1979). In this setting, a decision maker chooses a menu in period 1 and consumes an item from the selected menu in pe-riod 2. Moreover, preferences are not static so that the menu choice in period 1 takes into account the set of possible period 2 tastes, commonly referred to as 'unforeseen contin-gencies.' Most papers in this literature have treated the set of unforeseen contingencies as independent of the menu choice problem facing the decision maker. Menu-dependent preferences, however, capture the notion that the decision maker's conception of what tastes she may face in period 2 are framed by the choices she has available in period 1. We formally define and provide axiomatic foundations for menu-dependent preferences in the unforeseen contingencies framework. The main result in this paper is a pair of utility representation theorems which tog...

Research paper thumbnail of Unraveling in a repeated moral hazard model with multiple agents

Theoretical Economics, 2015

Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch ge... more Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public.

Research paper thumbnail of Lexicographic Multiple Prior Preferences

This paper introduces and axiomatizes lexicographic multiple prior preferences. Our model general... more This paper introduces and axiomatizes lexicographic multiple prior preferences. Our model generalizes lexicographic subjective expected utility (LSEU) (see, e.g. Blume et al. (1991a)) by allowing for uncertainty (i.e. multiple priors) in each step of the ordered chain of beliefs. This extends the applicability of lexicographic choice procedures to settings with payoff uncertainty. We give two such applications. The first is a signaling model, where the uncertainty is about the payoff types of players. The second is a problem of insurance under uncertainty, where the uncertainty is about endowments.

Research paper thumbnail of Discrete models of menu choice

... 'We have borrowed this term from papers by Jawwad Noor. ... For each x GM,, define t... more ... 'We have borrowed this term from papers by Jawwad Noor. ... For each x GM,, define the lower bound-ary for u(x,Mi) to be LB(x,Mi) := msK{(XtM)\McMitMe$(n)}u(x>M)- Put 6It is easy to extend the given argument to the case where there may be indifferences between menus of the ...

Research paper thumbnail of Temptation and Subjective Feasibility

This paper develops a new model of menu choice induced by temptation. The presence of temptation ... more This paper develops a new model of menu choice induced by temptation. The presence of temptation creates a utility cost in that choices cannot be recovered by maximization of consumption utility. However, in our model the cost of temptation is borne through constraints on the DM’s choice domain as opposed to an explicit cost function. The idea is that, within menu, objects are grouped together by attribute and the DM is only able to select an attribute possessed by a target choice, as opposed to selecting the choice itself. For example, when the DM looks at a dinner menu he can partly control himself by looking at the low-calorie portion of the menu, but within this subset he might be drawn to the most tempting option. The main feature of our model is the manner in which choices are grouped by attributes, we refer to these as categories. Categories are subjective, so that the exercise of the paper is to show how these can be elicited and identified from choices over menus.

Research paper thumbnail of Dual-self Representations of Ambiguity Preferences

SSRN Electronic Journal

We propose a class of multiple-prior representations of preferences under ambiguity, where the be... more We propose a class of multiple-prior representations of preferences under ambiguity, where the belief the decision-maker (DM) uses to evaluate an uncertain prospect is the outcome of a game played by two conflicting forces, Pessimism and Optimism. The model does not restrict the sign of the DM's ambiguity attitude, and we show that it provides a unified framework through which to characterize different degrees of ambiguity aversion, and to represent the coexistence of negative and positive ambiguity attitudes within individuals as documented in experiments. We prove that our baseline representation, dual-self expected utility (DSEU), yields a novel representation of the class of invariant biseparable preferences (Ghirardato, Maccheroni, and Marinacci, 2004), which drops uncertainty aversion from maxmin expected utility (Gilboa and Schmeidler, 1989). Extensions of DSEU allow for more general departures from independence.

Research paper thumbnail of An Axiomatic Analysis of Planner-Doer Games

SSRN Electronic Journal

Planner-doer games, introduced in Thaler and Shefrin (1981), are frequently used to model decisio... more Planner-doer games, introduced in Thaler and Shefrin (1981), are frequently used to model decision-makers with self-control problems. In such games, the planner moves first by making a strategic commitment which partially restricts the doer's choices and the doer follows by making a consumption choice. The game itself is a subjective construct, meaning that neither the preferences of the players nor the planner’s commitment strategies are necessarily observable. However, when commitment strategies only allow partial control of the doer there is - in principle - an observable preference for external commitment, i.e. a preference over menus. The contribution of this paper is that we use preferences over menus to elicit and partially identify a class of planner-doer games.

Research paper thumbnail of Incomplete Menu Preference and Ambiguity

SSRN Electronic Journal

This paper studies a problem of choice under uncertainty in which a decision-maker's (DM) cho... more This paper studies a problem of choice under uncertainty in which a decision-maker's (DM) choices randomly map to consumption outcomes. The primitive is a binary relation on menus, where a menu is a set of possible ex post outcomes. After the DM selects a menu, nature (not the DM) makes a consumption choice from the menu. Nature's choice function is subject to uncertainty, so that the choice of a particular menu yields a distribution over the ex post outcomes supported by that menu. Hence, from the DM’s view, by choosing a menu it is as if he is choosing a distribution over ex post outcomes. The main result provides axiomatic foundations for a menu-choice analogue of the Bewley model of Knightian uncertainty.

Research paper thumbnail of Dynamically consistent voting rules

Journal of Economic Theory, 2015

This paper studies families of social choice functions (SCF's), i.e. a collection of social choic... more This paper studies families of social choice functions (SCF's), i.e. a collection of social choice functions {Φ A }, where the family is indexed by the option set of choices. These (sets of) functions arise in sequential choice problems where at each stage a set of options is given to a population of voters and a choice rule must aggregate stated preferences to generate an aggregate choice. In such settings, the aggregate decision-making process should reflect some form of consistency across choice problems. We characterize the class of (sequences of) SCF's that satisfy two properties: (i) strategy-proofness and (ii) a notion of dynamic consistency inspired by Sen's α from choice theory. When the aggregate choice is anonymous, this class turns out to be exactly the set of q-rules, i.e. rules in which the selected alternative is the most preferred alternative of the voter at the q-th N-tile of the population (where N is the set of voters). This nests median voter schemes when no phantom voters are admitted in the decision rule. Without anonymity we obtain a class that we call "vote-by-committee" rules, the name due to some similarities with a class of SCF's axiomatized in Barberá et al. (1991).

Research paper thumbnail of A Theory of Local Menu Preferences

This paper develops a theory of choice in which the constraints of a decision problem influence t... more This paper develops a theory of choice in which the constraints of a decision problem influence the decision-maker's preferences over the objects of choice. We use the framework of menu choice to model this idea. In this setting, the menu is the constraint and the objects of choice are the elements in the menu. Most papers in the menu choice literature assume that the decision-maker (DM) implicitly formulates a state-dependent ranking over all elements of the consump-tion space prior to evaluating the utility of any given menu. Thus, the decision maker behaves as if his domain of choice is the full space of menus. In this paper, we model decision-makers who behave as if they do not control the menu (i.e. the constraints) they are given, and hence evaluate each menu as a context-dependent choice problem. Menu preferences that exhibit this context-dependence are called local menu preferences. We give a definition of context-dependence and provide an axiomatic model of context-depe...

Research paper thumbnail of Generalized Preference for Flexibility

This paper provides a new representation theorem for the class of menu preferences that satisfy o... more This paper provides a new representation theorem for the class of menu preferences that satisfy only the order and monotonicity axioms. The utility function we axiomatize nests both the model for preference for flexibility in Kreps (1979) and a model of local preference for flexibility introduced in a companion paper, Discrete Models of Unforeseen Contingencies.

Research paper thumbnail of Incomplete Menu Preferences and Ambiguity

This paper models decision problems where the decision-maker (DM) may not be able to compare two ... more This paper models decision problems where the decision-maker (DM) may not be able to compare two risky acts. Incomparability of acts can, in prin-ciple, stem from two sources. First, perception of risk is subjective and the DM might have only a coarse assessment of the probability measure over the space of ex post outcomes that determine the values of the acts. Second, there may be co-dependence on the realized outcome and the set of the consumption choices that are available conditional on that outcome. Existing models of incomplete preferences, which build on Bewley's (1986) model of Knightian Uncertainty, accommodate the first consideration, but foreclose the second possibility as a source of incompleteness. This paper presents an axiomatic model of incomplete preferences that accounts for both of these possibilities as a source of incompleteness.

Research paper thumbnail of A Theory of Temptation without Uncertainty

This paper studies menu choice problems in which the decision maker faces no ex ante uncertainty ... more This paper studies menu choice problems in which the decision maker faces no ex ante uncertainty about her ex post preferences, yet nevertheless ex-hibits non-trivial menu preferences due to the presence of self-control problems. We introduce a new class of utilities which generalize the Gul-Pesendorfer (2001, 2005) 'No Self-Control' model. The main results in the paper provide utility rep-resentation theorems for this class of utilities.

Research paper thumbnail of Discrete Models of Unforeseen Contingencies

This paper introduces the notion of menu-dependent preferences into the two-period menu choice co... more This paper introduces the notion of menu-dependent preferences into the two-period menu choice context first studied by Kreps (1979). In this setting, a decision maker chooses a menu in period 1 and consumes an item from the selected menu in pe-riod 2. Moreover, preferences are not static so that the menu choice in period 1 takes into account the set of possible period 2 tastes, commonly referred to as 'unforeseen contin-gencies.' Most papers in this literature have treated the set of unforeseen contingencies as independent of the menu choice problem facing the decision maker. Menu-dependent preferences, however, capture the notion that the decision maker's conception of what tastes she may face in period 2 are framed by the choices she has available in period 1. We formally define and provide axiomatic foundations for menu-dependent preferences in the unforeseen contingencies framework. The main result in this paper is a pair of utility representation theorems which tog...

Research paper thumbnail of Unraveling in a repeated moral hazard model with multiple agents

Theoretical Economics, 2015

Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch ge... more Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public.