We undertake a decision-theoretic analysis of a model of bilateral risk sharing, conceptualized in two stages: first, agents choose risky endowments (Savage acts), and second, they form a risk sharing arrangement. Only the first-stage choices are observable to the analyst. We formulate axioms that put joint restrictions on best responses in the first stage and provide a representation result according to which agents behave as if they are risk averse expected utility maximizers who anticipate the subsequent sharing arrangement. All the parameters of the model, including the sharing arrangement, can be identified from this first-stage choice data. Applications are discussed.

We axiomatize a model of preferences over menus of acts in which not only beliefs but also state-dependent utilities depend on the individual’s choice of information. Our most general model features both contemplation about the appropriate way to evaluate alternatives as well as acquisition of information about the payoff relevant state of the world, before a choice is made. We then focus on the special case where the value of alternatives depends directly and exclusively on the state of the world and on the choice of information about that state.