A Probabilistic Expected Utility Theory of Risky Binary Choices.

Abstract

Let P be a real function on pairs of gambles with quantitative outcomes, with P(p,q) interpreted as the probability that an individual will choose gamble p over q when required to make a choice between the two. Assuming that outcome x is preferred to y when x > y, an incremental expected utility advantage model is defined for P. This model is based on an underlying von Neumann-Morgenstern utility function on outcomes and on interdependent aspects of pairs of gambles. It can be viewed as a modified expected utility model that accounts for probabilistic choice behavior. Eight axioms for P are shown to be necessary and sufficient for the incremental expected utility advantage model.

Document Details

Document Type
Technical Report
Publication Date
Sep 01, 1976
Accession Number
ADA031219

Entities

People

  • Peter C. Fishburn

Organizations

  • Pennsylvania State University

Tags

DTIC Thesaurus Topics

  • Applied Mathematics
  • Game Theory
  • Interdisciplinary Science
  • Mathematics
  • Operations Research
  • Probability

Fields of Study

  • Economics

Readers

  • Mathematical Modeling and Probability Theory.
  • Team-Based Human-Centered Cognitive Task Decision Making and Information Performance.