Benchmarking real-valued acts

Erio Castagnoli and Marco LiCalzi
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Erio Castagnoli: Bocconii University, Milan, Italy

Microeconomics from University Library of Munich, Germany

Abstract: A benchmarking procedure ranks real-valued acts by the probability that they outperform a benchmark B; that is, an act f is evaluated by means of the functional V(f) = P(f > B). Expected utility is a special case of benchmarking procedure, where the acts and the benchmark are stochastically independent. This paper provides axiomatic characterizations of preference relations that are representable as benchmarking procedures. The key axiom is the sure-thing principle. When the state space is infinite, different continuity assumptions translate into different properties of the probability P.

Keywords: sure-thing principle; state-dependent expected utility; measure representation approach; target-based reasoning (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2005-02-02
Note: Type of Document - pdf; pages: 22
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Journal Article: Benchmarking real-valued acts (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpmi:0502001

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