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An expected utility theory for state-dependent preferences
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Karni, Edi and Schmeidler, David (2016) An expected utility theory for state-dependent preferences. Theory and Decision, 18 (4). pp. 467-478. ISSN 0040-5833.
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Official URL: https://doi.org/10.1007/s11238-016-9545-0
Abstract
This note is a generalization and improved interpretation of the main result of Karni and Schmeidler (An Expected utility theory for state-dependent preferences. Working paper no. 48-80 of the Foerder Institute for Economic Research, Faculty of Social Sciences, TelAviv University, 1980).Adecision-maker is supposed to possess a preference relation on acts and another preference relation on state-prize lotteries, both of which are assumed to satisfy the von Neumann–Morgenstern axioms. In addition, the two preference relations restricted to a state of nature are assumed to agree.We show that these axioms are necessary and sufficient for the existence of subjective expected utility over acts with state-dependent utility functions and a subjective probability measure. This subjective probability measure is unique when conditioned on the set of states of nature in which not all the prizes are equally desirable.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HB Economic Theory | ||||||||
Divisions: | Faculty of Social Sciences > Warwick Business School > Behavioural Science Faculty of Social Sciences > Warwick Business School |
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Journal or Publication Title: | Theory and Decision | ||||||||
Publisher: | Springer Netherlands | ||||||||
ISSN: | 0040-5833 | ||||||||
Official Date: | November 2016 | ||||||||
Dates: |
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Volume: | 18 | ||||||||
Number: | 4 | ||||||||
Page Range: | pp. 467-478 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access |
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