American Economic Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
An Evolutionary Perspective on Updating Risk and Ambiguity Preferences
American Economic Review: Insights
(pp. 214–32)
Abstract
Using an evolutionary approach, we address the prominent tension in the literature that updating of ambiguity and nonexpected-utility preferences cannot, in general, be both dynamically consistent and consequentialist. Perhaps not surprisingly, evolutionary optimality requires dynamic consistency. The more subtle insight is the evolutionary optimality of systematic violations of consequentialism. We base our investigation on the model of adaptive preferences (Sadowski and Sarver 2024), which generalizes the model of Robson (1996) and nests variants of many well-known models in the literature.Citation
Sadowski, Philipp, and Todd Sarver. 2026. "An Evolutionary Perspective on Updating Risk and Ambiguity Preferences." American Economic Review: Insights 8 (2): 214–32. DOI: 10.1257/aeri.20240698Additional Materials
JEL Classification
- B52 Current Heterodox Approaches: Historical; Institutional; Evolutionary
- D11 Consumer Economics: Theory
- D81 Criteria for Decision-Making under Risk and Uncertainty
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness