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Handbook of the Economics of Risk and Uncertainty
book

Handbook of the Economics of Risk and Uncertainty

by Mark Machina, W. Kip Viscusi
November 2013
Beginner content levelBeginner
896 pages
35h 10m
English
North Holland
Content preview from Handbook of the Economics of Risk and Uncertainty
Edi Karni
14
1.3.4 The Model of Anscombe and Aumann
Let S be a finite set of states, and let the set of consequences,
�(X)
, be the set of lotteries
on an arbitrary set of prizes, X.The choice set, H, consists of all the mappings from S
to
�(X)
. Elements of H are acts whose consequences are lottery tickets. The choice of
an act, h, by the decision maker and a state, s, by nature entitles the decision maker to
participate in the lottery h(s) to determine his/her ultimate payoff, which is some ele-
ment of the set X. Following Anscombe and Aumann (1963), it is useful to think about
states as the possible outcomes of a horse race. An act is a bet on ...
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Publisher Resources

ISBN: 9780444536853