Expected utility without utility |
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Authors: | E. Castagnoli M. Li Calzi |
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Affiliation: | (1) Istituto di Metodi Quantitativi Università L. Bocconi, 20136 Milano, Italy;(2) Dipartimento di Matematica Applicata, Università di Venezia, 30123 Venezia, Italy |
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Abstract: | This paper advances an interpretation of Von Neumann-Morgenstern's expected utility model for preferences over lotteries which does not require the notion of a cardinal utility over prizes and can be phrased entirely in the language of probability. According to it, the expected utility of a lottery can be read as the probability that this lottery outperforms another given independent lottery. The implications of this interpretation for some topics and models in decision theory are considered. |
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Keywords: | Expected utility cardinal utility benchmark risk attitude stochastic dominance |
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