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A characterization of Brandenburger–Friedenberg–Keisler’s assumption
- Lee, Byung Soo
- Economics letters 2016 v.145 pp. 60-64
- decision making, economics, probability
- Brandenburger et al.’s (2008) preference-based definition of assumption has two requirements: nontriviality and strict determination. We show that a decision maker’s preferences satisfy strict determination (on a given event) if and only if her unconditional preferences are equivalent to a lexicographic evaluation of her conditional preferences. An immediate application of this result yields a characterization of all lexicographic probability systems (LPS’s)—similar to the characterization in Brandenburger et al.(2008) for a strict subset of LPS’s—under which an event is assumed.