Showing papers on "Von Neumann–Morgenstern utility theorem published in 1985"
TL;DR: In this paper, a continuous-outcome expected utility model is presented that generalizes the expected utility theory of Bueno de Mesquita and provides a sound logical basis for the construction of systemic theories.
Abstract: A continuous-outcome expected utility model is presented that generalizes the expected utility theory of Bueno de Mesquita An examination of the more general model uncovers several unstated assumptions within and produces new conclusions from, while supporting the basic logic of, the expected utility theory Among the new conclusions is the finding that nations shifting their level of acceptable outcomes to a conflict upward or downward after fighting starts is perfectly consistent with a rational model The derivations demonstrate the value of theoretical articulation, a task too often neglected in quantitative international relations, and provide a sound logical basis for the construction of systemic theories based upon the expected utility theory
61 citations
TL;DR: In this article, the general implications of expected utility maximization for the static model of the competitive firm under output price uncertainty for any risk preference and probability structure were derived. And the results for the empirical analysis of risk-responsive behavior under uncertainty are discussed.
56 citations
TL;DR: In this paper, it is shown that SWU theory necessarily involves violations of dominance, but that the theory can be modified to avoid these violations, which is a special case of J. Quiggin's anticipated utility theory.
46 citations
TL;DR: The Foundations of the Theory of Expected Utility and Probability were discussed at the Oslo Conference on Decision Theory as discussed by the authors, with a focus on the importance of what might have been.
Abstract: I / Foundations of Utility and Probability.- The Foundations of the Theory of Utility and Risk. Some Central Points of the Discussions at the Oslo Conference.- II / One Utility Function or Two?.- Utility and Risk Preference Functions.- Neo-Cardinalism.- Prediction, Measurement, and Error of Utility: A Reply to Allais.- III / Prescriptive Versus Descriptive Decision Models.- Remarks to Professor Allais' Contributions to the Theory of Expected Utility and Related Subjects.- Decision-Aid and Expected Utility Theory: A Critical Survey.- IV / Aspects of Process Utility.- The Importance of What Might Have Been.- Relativity in Decision Theory.- The Utility of Gambling and of Outcomes: Inconsistent First Approximations.- Name Index.
42 citations
TL;DR: In this paper it is shown that the standard use of preference relations is such that the relata of all preference comparisons have to be (at least) alternatives, in a sense according to which altemativeness is more than mere incompatibility in the actual world W o but less than logical incompatibility or incompatibility for all possible worlds W i. The result of these reflections will be that, though this semantical groundwork is provided by some hardly disputable insights of utility theory, it is not, despite contrary claims, also adequate for giving the truth conditions of standard preference
Abstract: This paper consists of two parts. In the first one (which has two sections) I begin by drawing attention to a fact that in my opinion has not been sufficiently considered in constructing systems of preference logic (PL), namely that the standard use of preference relations is such that the relata of all preference comparisons have to be (at least) alternatives,in a sense according to which altemativeness is more than mere incompatibility in the actual world W o but less than logical incompatibility or incompatibility in all possible worlds W i. I discuss some aspects of this assertion against the background of utility theory (UT), and give, in the second section of part I, some reasons backing my claim that it is true. In the second part I make use of several conclusions from the first part, in discussing both the acceptability of certain controversial rules and axioms suggested for PL and the adequacy of what I hold to be the most appropriate type of semantical groundwork given so far for PL. I also distinguish there between basic and nonbasic preference. The result of these reflections will be that, though this semantical groundwork is provided by some hardly disputable insights of UT, it is not, despite contrary claims, also adequate for giving the truth conditions of standard preference statements. Moreover I shall argue that the mere truth-functional structuring of preference relata is, for several reasons, an insufficient formal equipment for an appropriate logic of standard preference.
11 citations
Journal Article•
TL;DR: In this article, subjective expected utility maximization with continuous utility is characterized, extending the result of Wakker (1984, Journal of Mathematical Psychology) to infinite state spaces.
Abstract: Subjective expected utility maximization with continuous utility is characterized, extending the result of Wakker (1984, Journal of Mathematical Psychology) to infinite state spaces. In Savage (1954, The Foundations of Statistics) the main restriction, P6, requires structure for the state space, e.g. this must be infinite. The main restriction of this paper, requiring continuity of the utility function, may be more natural in economic contexts, since it is based on topological structure of the consequence space, structure that usually is present in economic contexts anyhow. Replacing the state interpretation by a time interpretation yields a characterization for dynamic contexts.
10 citations
TL;DR: In this article, the authors study the aggregation of preferences when intensities are taken into account, and show that with a finite number of choices there exist no continuous anonymous aggregation rules that respect unanimity, for such preferences or utilities.
Abstract: We study the aggregation of preferences when intensities are taken into account: the aggregation of cardinal preferences, and also of von Neumann-Morgenstern utilities for choices under uncertainty. We show that with a finite number of choices there exist no continuous anonymous aggregation rules that respect unanimity, for such preferences or utilities. With infinitely many (discrete sets of) choices, such rules do exist and they are constructed here. However, their existence is not robust: each is a limit of rules that do not respect unanimity. Both results are for a finite number of individuals. The results are obtained by studying the global topological structure of spaces of cardinal preferences and of von Neumann-Morgenstern utilities. With a finite number of choices, these spaces are proven to be noncontractible. With infinitely many choices, on the other hand, they are proven to be contractible.
9 citations
TL;DR: In this article, a modified strategy is devised allowing the application of the expected utility formula to these otherwise problematic cases, such as the Prisoners' Dilemma, which allows the resolution of the contradiction and also allows the modified strategy to resolve otherwise paradoxical cases of group choice.
Abstract: In this paper I propose a view uniformly extending expected utility calculations to both individual and group choice contexts. By way of three related cases I discuss the problems inherent in applying expected utility to group choice cases. I show that the problem with such group cases does not essentially depend upon the fact that more than one agent is involved. A modified strategy is then devised allowing the application of the expected utility formula to these otherwise problematic cases. One case, however, leads to contradiction. But recognizing the falsity of the proposition. (1) If an agent x knows options A and B are both available, and x knows that were he to do A he would be better off (in every respect) than were he to do B, then doing A is more rational for x than doing B, allows the resolution of the contradiction and also allows my modified strategy to resolve otherwise paradoxical cases of group choice such as the Prisoners' Dilemma.
4 citations
4 citations
Posted Content•
TL;DR: In this paper, an axiomatic model based on an extraneous random device generating objective probabilities for the derivation of expected utilities and subjective probabilities is presented, and four basic axioms fully determine a real-valued utility function and a finitely additive subjective probability measure.
Abstract: This paper provides an axiomatic model based on an extraneous random device generating objective probabilities for the derivation of expected utilities and subjective probabilities. Four basic axioms fully determine a real-valued utility function and a finitely additive subjective probability measure. The restrictions of these axioms to lotteries depending only upon events of the random device yield the von Neumann-Morgenstern axioms.
1 citations
TL;DR: In this article, the subjective probabilities of an expected utility maximizer cannot be inferred from his choices among lotteries, and the transformations of probabilities consistent with the given preferences are characterized.