Utility theory with probability dependent outcome valuation: Extensions and applications |
| |
Authors: | Edi Karni Edward E Schlee |
| |
Institution: | 1. Department of Economics, The Johns Hopkins University, 21218, Baltimore, MD 2. Department of Economics, Arizona State University, 85287, Tempe, AZ
|
| |
Abstract: | This article extends Karni's (1992) Utility Theory with Probability Dependent Outcome Valuation (UTP-DOV) to accommodate a wider set of preferences, and applies the new representation to a variety of decision problems under risk. First, we present a new, more general, axiomatization of UTPDOV that renders the underlying intuition more transparent. Second, we develop sufficient conditions under which UTPDOV satisfies the betweenness and the ordinal independence axioms. Finally, we examine functional forms of the UTPDOV model that are consistent with several well known departures from the independence axiom. |
| |
Keywords: | nonexpected utility theory probability dependent outcome valuation betweenness ordinal independence Allais paradox Bergen paradox |
本文献已被 SpringerLink 等数据库收录! |
|