We show in this paper that the AGM postulates are too weak to ensure t
he rational preservation of conditional beliefs during belief revision
, thus permitting improper responses to sequences of observations. We
remedy this weakness by proposing four additional postulates, which ar
e sound relative to a qualitative version of probabilistic conditionin
g. Contrary to the AGM framework, the proposed postulates characterize
belief revision as a process which may depend on elements of an epist
emic state that are not necessarily captured by a belief set. We also
show that a simple modification to the AGM framework can allow belief
revision to be a function of epistemic states. We establish a model-ba
sed representation theorem which characterizes the proposed postulates
and constrains, in turn, the way in which entrenchment orderings may
be transformed under iterated belief revision.