Axiomatic Foundations of Expected Utility and Subjective Probability
3
the principles underlying the expected utility criterion and that subjective probabilities
can be inferred from observing this behavior. The normative interpretation presumes
that the principles underlying the expected utility criterion are basic tenets of rational
choice and that rational choice implies, among others, the possibility of quantifying
beliefs by probabilities.
The positive interpretation is an hypothesis about choice behavior, which, like other
scientific theories, has testable implications. By contrast, the normative interpretation
maintains that there are pr ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month, and much more.