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How to Make an Action Attractive

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abstract

A policymaker often wants to steer a decision-maker toward one of two actions, but lacks reliable knowledge of how the decision-maker perceives uncertainty or evaluates risk. We formalize a notion of robust paternalism: a modification a' of a desired action a is robustly more attractive than a relative to b if, for every belief over states and every increasing concave utility function, whenever the decision-maker prefers a to b, she also prefers a' to b. We characterize all such modifications directly in terms of state-dependent payoffs and discuss applications to political competition, bilateral trade, insurance, and information acquisition.

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econ.TH 1

years

2024 1

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UNVERDICTED 1

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How to Make an Action Attractive

econ.TH · 2024-08-17 · unverdicted · novelty 6.0

The paper characterizes all modifications to a target action that remain preferred to a status-quo alternative for every increasing concave utility and every belief over states.

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  • How to Make an Action Attractive econ.TH · 2024-08-17 · unverdicted · none · ref 2 · internal anchor

    The paper characterizes all modifications to a target action that remain preferred to a status-quo alternative for every increasing concave utility and every belief over states.