Dual Betweenness

Zvi Safra and Uzi Segal
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Zvi Safra: Faculty of Management, Tel Aviv University
Authors registered in the RePEc Author Service: Rachael Evadne Goodhue, Leo K. Simon and Gordon C. Rausser

No 9805, University of Western Ontario, Departmental Research Report Series from University of Western Ontario, Department of Economics

Abstract: A key feature of the rank dependent model for decision making under risk is that the weighting of an outcome depends on its relative rank. This theory received numerous axiomatizations, however, all these sets of axioms need to make an explicit reference to the ranking of the outcomes. This situation is unsatisfactory, as it seems to be desirable to get the ranking property of this model as a consequence of the model, rather than as an assumption. Yaari offered a special version of this model (called dual theory), where the utility function is linear. This paper offers a set of axioms implying a generalization of Yaari's dual theory, without making any reference to the order of the outcomes. The main axiom is called dual betweenness, which, unlike the usual case, is made on random variables rather than distribution functions.

Date: 1998
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Citations: View citations in EconPapers (9)

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