A Representation Theorem for "Preference for Flexibility"

Abstract

This paper concerns individual choice among from which the individual will later choose a single object. In particular, it concerns relations on opportunity sets which satisfy preference for flexibility, a set is at least as good as all of its subsets, but which may not satisfy revealed preference, the union of two sets may be strictly preferred to each one taken separately. A representation theorem is given which rationalizes such choice behavior as being as if the individual is uncertain about future tastes. IN MANY PROBLEMS of individual choice, the choice is made in more than one stage. At early stages, the individual makes decisions which will constrain the choices that are feasible later. In effect, these early choices amount to choice of a subset of items from which subsequent choice will be made. This paper concerns choice among such opportunity sets, where the individual has a desire for flexibility which is irrational if the individual knows what his subsequent preferences will be.