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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
Ambiguity and Ambiguity Aversion
751
Monotonicity: For all acts f, g, if the roulette lottery f(s) is weakly preferred to the
roulette lottery g(s) for every state s, then f g.
The expected utility representation of preferences over horse-roulette acts f = (…;P
j
if E
j
; …) = (…;(…;x
ij
,p
ij
; …),E
j
; …) implied by these axioms takes the form
where U(·) is a von Neumann-Morgenstern utility function and μ is a finitely additive
probability measure (“prior”), which is uniquely identified as in Savage’s axiomatiza-
tion. As seen in the above equation, the term U( f (s)) in the integral
S
U( f (s))dµ(s
)
is the expected utility of the roulette lottery f ...
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Publisher Resources

ISBN: 9780444536853