When is there state independence?

Hill Brian ()

No 883, HEC Research Papers Series from HEC Paris

Abstract: It has been noticed that whether a preference relation can be represented by state-independent utilities as opposed to state-dependent utilities may depend on which acts count as constant acts [Schervish et al., 1990]. Indeed, this remark underlies an extension of Savage’s expected utility theory to the state-dependent case that was proposed by Edi Karni [Karni, 1993]. This paper contains a characterisation of the preference relations that permit a choice of acts which can play the role of constant acts, and relative to which there is a representation involving a state-independent utility function. This result applies both in the Savage and in the Anscombe & Aumann frameworks. It has as an immediate corollary an extension of Karni’s representation theorem. Finally, it is of methodological interest, insofar that it harnesses techniques from mathematical logic to prove a theorem of interest to decision theorists and economists.

Keywords: Subjective expected utility; State-dependent utility; Monotonicity axiom (search for similar items in EconPapers)
JEL-codes: C69 D81 (search for similar items in EconPapers)
Pages: 883 pages
Date: 2007-11-22
New Economics Papers: this item is included in nep-cdm, nep-hpe and nep-upt
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Related works:
Journal Article: When is there state independence? (2009)
Working Paper: When is there state independence? (2009)
Working Paper: When is there state independence? (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:0883

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