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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
Rationality and Dynamic Consistency Under Risk and Uncertainty
55
Theorem2.4 Assume that
is an arbitrary binary preference relation on the set
L := �(Y
)
of
simple roulette lotteries over consequences in the domain Y. The following two statements are equivalent:
(i) The preference relation
on
�(
Y
)
is represented by the expected value of each von
Neumann–Morgenstern utility function
Y
y �→ v(y
)
in a cardinal equivalence class.
Moreover, this equivalence class is unique except in the trivial case where
induces at most two
indifference classes among the set δ
y
(y Y) of degenerate lotteries.
(ii) The preference relation
on
�(
Y )
satisfies ...
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Publisher Resources

ISBN: 9780444536853