EconPapers    
Economics at your fingertips  
 

An expected utility theory for state-dependent preferences

Edi Karni and David Schmeidler
Additional contact information
David Schmeidler: Tel Aviv University

Theory and Decision, 2016, vol. 81, issue 4, 467-478

Abstract: 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, Tel Aviv University, 1980). A decision-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.

Keywords: Subjective expected utility; State-dependent preferences; State-dependent utility; Subjective probabilities (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s11238-016-9545-0 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:kap:theord:v:81:y:2016:i:4:d:10.1007_s11238-016-9545-0

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/11238/PS2

Access Statistics for this article

Theory and Decision is currently edited by Mohammed Abdellaoui

More articles in Theory and Decision from Springer
Series data maintained by Sonal Shukla ().

 
Page updated 2017-04-25
Handle: RePEc:kap:theord:v:81:y:2016:i:4:d:10.1007_s11238-016-9545-0