Procedural Mixture Spaces
MPRA Paper from University Library of Munich, Germany
This paper provides a representation theorem for procedural mixture spaces. Procedural mixture spaces are mixture spaces in which it is not necessarily true that a mixture of two identical elements yields the same element. Under the remaining standard assumptions of mixture spaces, the following representation theorem is proven; a rational, independent, and continuous preference relation over mixture spaces can be represented either by expected utility plus the Shannon entropy or by expected utility under probability distortions plus the Renyi entropy. The entropy components can be interpreted as the utility or disutility from resolving the mixture and therefore as a procedural as opposed to consequentialist value.
Keywords: Risk; decision theory; procedural value; lotteries; mixture spaces (search for similar items in EconPapers)
JEL-codes: D01 D03 D81 (search for similar items in EconPapers)
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