Utility Theory with Probability Dependent Outcome Valuation: Extensions and Applications

Edi Karni and Edward Schlee

Journal of Risk and Uncertainty, 1995, vol. 10, issue 2, 127-42

Abstract: This article extends Karni's (1992) Utility Theory with Probability Dependent Outcome Valuation (UTP-DOV) to accommodate a wider set of preferences, and applies the new representation to a variety of decision problems under risk. First, we present a new, more general, axiomatization of UTPDOV that renders the underlying intuition more transparent. Second, we develop sufficient conditions under which UTPDOV satisfies the betweenness and the ordinal independence axioms. Finally, we examine functional forms of the UTPDOV model that are consistent with several well known departures from the independence axiom. Copyright 1995 by Kluwer Academic Publishers

Date: 1995
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jrisku:v:10:y:1995:i:2:p:127-42

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