Independence and indifferent points imply continuity

Gerrit Bauch

Papers from arXiv.org

Abstract: The expected utility theorem of von Neumann and Morgenstern (1947) has been a milestone in economics, describing rational behavior by two axioms on a weak preference on lotteries on a finite set of outcomes: the Independence Axiom and the Continuity Axiom. For a weak preference fulfilling the Independence Axiom, I prove that continuity is equivalent to the existence of a set indifferent lotteries spanning a hyperplane.

Date: 2024-11
New Economics Papers: this item is included in nep-mic and nep-upt
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