Scandinavian Working Papers in Economics

SSE Working Paper Series in Economics,
Stockholm School of Economics

No 2015:2: Characterizing lexicographic preferences

Henrik Petri () and Mark Voorneveld ()
Additional contact information
Henrik Petri: Department of Finance, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden
Mark Voorneveld: Dept. of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden

Abstract: We characterize lexicographic preferences on product sets of finitely many coordinates. The main new axiom is a robustness property. It roughly requires this: Suppose x is preferred to y; many of its coordinates indicate that the former is better and only a few indicate the opposite. Then the decision maker is allowed a change of mind turning one coordinate in favor of x to an indifference: even if one less argument supports the preference, the fact that we started with many arguments in favor of x suggests that such a small change is not enough to give rise to the opposite preference.

Keywords: lexicographic preferences; lexicographic order; characterization; preferences

JEL-codes: D01; D11; D70

24 pages, April 13, 2015

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