Axiomatic Foundations of Expected Utility and Subjective Probability
11
p. 45). Implicit in the definition of the state space is the notion that there is a unique
true state. Subsets of the set of states are events. An event is said to obtain if it includes
the true state.
A consequence is a description of anything that might happen to the decision
maker. The set of consequences is arbitrary. A combination of an act, f, chosen by the
decision maker, and a state, s, “selected” by nature determines a unique consequence,
c
f,s
∈C
.
Decision makers are characterized by preference relations,
on F, having the usual
interpretation, namely,
f
g
means ...
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