Dynamic Consistency and Ambiguity: A Reappraisal It is commonly argued that dynamic consistency, consequentialism and nonexpected utility are incompatible. The first aim of this paper is to rebut such arguments, by targeting the implicit assumption that the relevant contingencies correspond to objective resolutions of uncertainty (that is, events in a state space). These are not necessarily the same as the contingencies that the decision maker envisages, and we argue that any reasonable notion of dynamic consistency involves the latter, rather than the former, sort of contingency. We formulate such a version of dynamic consistency and show it to be compatible with consequentialism and nonexpected utility. We then analyze the economic consequences of this new perspective. On the one hand, it provides a principled justification for restrictions on nonexpected utility models (such as that proposed by Epstein and Schneider (2003)) in applications to dynamic choice problems. On the other hand, it provides a new analysis of the issue of attitude to information; contra standard arguments, the value of information under nonexpected utility is nonnegative as long as the information offered does not compromise information that the decision maker had otherwise expected to receive. Finally, we give a representation theorem for the contingencies the decision maker envisages, in the case where he uses the maxmin expected utility rule.

On the Irrationality of Being in Two Minds This article presents a general framework that allows irrational decision making to be theoretically investigated and simulated. Rationality in human decision making under uncertainty is normatively prescribed by the axioms of probability theory in order to maximize utility. However, substantial literature from psychology and cognitive science shows that human decisions regularly deviate from these axioms. Bistable probabilities are proposed as a principled and straight forward means for modeling (ir)rational decision making, which occurs when a decision maker is in xe2x80x9ctwo mindsxe2x80x9d. We show that bistable probabilities can be formalized by positiveoperatorvalued projections in quantum mechanics. We found that (1) irrational decision making necessarily involves a wider spectrum of causal relationships than rational decision making, (2) the accessible information turns out to be greater in irrational decision making when compared to rational decision making, and (3) irrational decision making is quantumlike because it violates the Bellxe2x80x93Wigner polytope.