Savage's Theorem Under Changing Awareness

Franz Dietrich

MPRA Paper from University Library of Munich, Germany

Abstract: This paper proposes a simple unified framework of changing awareness, addressing both outcome and (nature) state awareness, and both how fine and how exhaustive the awareness is. Six axioms characterize an (essentially unique) expected-utility representation of preferences, in which utilities and probabilities are revised systematically under changes in awareness. Revision is governed by three well-defined rules: (R1) certain utilities are transformed affinely, (R2) certain probabilities are transformed proportionally, and (R3) certain (`objective') probabilities are preserved. Rule R2 parallels Karni and Viero's (2013) 'reverse Bayesianism' and Ahn and Ergin's (2010) 'partition-dependence'. Savage's (1954) theorem emerges in the special case of fixed awareness. The theorem draws mathematically on Kopylov (2007), Niiniluoto (1972) and Wakker (1981).

Keywords: Decision under uncertainty; outcome unawareness versus state unawareness; non-refinement versus non-exhaustiveness; utility revision versus probability revision (search for similar items in EconPapers)
JEL-codes: D80 D81 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-mic and nep-upt
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https://mpra.ub.uni-muenchen.de/71306/1/MPRA_paper_71306.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/80744/1/MPRA_paper_80744.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/85301/1/MPRA_paper_85301.pdf revised version (application/pdf)

Related works:
Journal Article: Savage's theorem under changing awareness (2018)
Working Paper: Savage's Theorem Under Changing Awareness (2018)
Working Paper: Savage's Theorem Under Changing Awareness (2018)
Working Paper: Savage's Theorem Under Changing Awareness (2018)
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