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Expected utility without utility

Erio Castagnoli and Marco LiCalzi ()
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Erio Castagnoli: Bocconi University, Italy

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Abstract: This paper advances an interpretation of Von Neumann–Morgenstern’s expected utility model for preferences over lotteries which does not require the notion of a cardinal utility over prizes and can be phrased entirely in the language of probability. According to it, the expected utility of a lottery can be read as the probability that this lottery outperforms another given independent lottery. The implications of this interpretation for some topics and models in decision theory are considered.

Keywords: expected utility; cardinal utility; benchmark; risk attitude; stochastic dominance (search for similar items in EconPapers)
JEL-codes: C7 D8 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge
Date: 2005-08-08
Note: Type of Document - pdf; pages: 16
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpga:0508004

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