Reconciliation with the Utility of Chance by Elaborated Outcomes Destroys the Axiomatic Basis of Expected Utility Theory
Theory and Decision 49 (3):223-234 (2000)
Expected utility theory does not directly deal with the utility of chance. It has been suggested in the literature (Samuelson, 1952, Markowitz, 1959) that this can be remedied by an approach which explicitly models the emotional consequences which give rise to the utility of chance. We refer to this as the elaborated outcomes approach. It is argued that the elaborated outcomes approach destroys the possibility of deriving a representation theorem based on the usual axioms of expected utility theory. This is shown with the help of an example due to Markowitz. It turns out that the space of conceivable lotteries over elaborated outcomes is too narrow to permit the application of the axioms. Moreover it is shown that a representation theorem does not hold for the example
|Keywords||Utility of chance Elaborated outcomes Axiomatised expected utility theory Representation theorem|
|Categories||categorize this paper)|
References found in this work BETA
No references found.
Citations of this work BETA
Similar books and articles
Revealed Preference and Expected Utility.Stephen A. Clark - 2000 - Theory and Decision 49 (2):159-174.
Expected Utility and Constrained Maximization: Problems of Compatibility. [REVIEW]Hans Lottenbach - 1994 - Erkenntnis 41 (1):37 - 48.
A Process Approach to the Utility for Gambling.Marc le Menestrel - 2001 - Theory and Decision 50 (3):249-262.
A Generalization of the Theory of Subjective Probability and Expected Utility.Robin Giles - 1992 - Synthese 90 (2):301 - 343.
From Outcomes to Acts: A Non-Standard Axiomatization of the Expected Utility Principle.Martin Peterson - 2004 - Journal of Philosophical Logic 33 (4):361-378.
Axiomatic Justifications of the Utility Principle: A Formal Investigation.Per-erik Malmnäs - 1994 - Synthese 99 (2):233 - 249.
Lottery Dependent Utility: A Reexamination.Ulrich Schmidt - 2001 - Theory and Decision 50 (1):35-58.
Expected Utility From Additive Utility on Semigroups.Juan C. Candeal, Juan R. de Miguel & Esteban Induráin - 2002 - Theory and Decision 53 (1):87-94.
Coherent Choice Functions Under Uncertainty.Teddy Seidenfeld, Mark J. Schervish & Joseph B. Kadane - 2009 - Synthese 172 (1):157 - 176.
On the Surprising Finding That Expected Utility is Literally Computed in the Brain.Jack Vromen - 2010 - Journal of Economic Methodology 17 (1):17-36.
An Axiomatic Basis for Distributional Equality in Utilitarianism.D. Schoch - 1994 - Erkenntnis 40 (1):121 - 132.
Representation Theorems and Realism About Degrees of Belief.Lyle Zynda - 2000 - Philosophy of Science 67 (1):45-69.
Added to index2010-09-02
Total downloads29 ( #173,330 of 2,154,170 )
Recent downloads (6 months)12 ( #45,586 of 2,154,170 )
How can I increase my downloads?