SSB and Weighted Linear Utility As Expected Utility with Suspicion

Robert Bordley and Gordon B. Hazen
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Robert Bordley: General Motors Research Laboratories, Warren, Michigan 48090-9055
Gordon B. Hazen: IE/MS Department, Northwestern University, Evanston, Illinois 60208-3117

Management Science, 1991, vol. 37, issue 4, 396-408

Abstract: We show that a "suspicious" subjective expected utility (SEU) maximizer, i.e., one who treats potential consequences of states as information useful in assessing the probability of those states, may under reasonable circumstances act as though he were maximizing either weighted linear utility, or skew-symmetric bilinear (SSB) utility. SEU with suspicion, therefore, explains at least as many empirical violations of SEU theory as do these and similar models. We give examples to illustrate how several important types of SEU violations may seem to arise when suspicion is present.

Keywords: decision theory; utility/preference theory; nonlinear utility (search for similar items in EconPapers)
Date: 1991
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:37:y:1991:i:4:p:396-408

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