Risk, Probabilities, and a New Theory of Cardinal Utility
Bibliographic Data
| ID | 10171307 |
|---|---|
| Authors | Jagdish Handa (corresponding author) |
| Year | 1977 |
| Volume | 85 |
| Issue | 1 |
| Pages | 97-122 |
| Publication date | 1977-02-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/260547 |
| OpenAlex | W1978473672 |
| Language | EN |
| Citations received | 18 |
| References cited | 12 |
This paper presents a set of certainty-equivalence (CE) axioms which allow the individual's preferences to be expressed by a cardinal utility index in the case of quantifiable single-good, uncertain (or certain) prospects. This axiom set differs from the von Neumann-Morgenstern (NM) axiom set. The analysis is extended to the multigood case, and its implications for risk taking are derived. Various tests reported in the literature on experimental psychology show the CE theory to outperform the von Neumann-Morgenstern one. Further, the CE theory satisfactory explains the Allais paradox, which contradicts the NM theory, and is thus to be preferred to the latter as a positive theory for decisions under uncertainty
Axiom · Axiom of choice · Certainty · Decision theory · Discrete mathematics · Economics · Equivalence (formal languages · Expected utility hypothesis · Mathematical economics · Microeconomics · Prospect theory · Pure mathematics · Set (abstract data type · Set theory · Statistics · Subjective expected utility · Von Neumann architecture · Von Neumann–Morgenstern utility theorem · Zermelo–Fraenkel set theory · Computer Science · Decision-Making and Behavioral Economics · Economic and Environmental Valuation · Experimental Behavioral Economics Studies · Mathematics
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Modelling travellers’ risky choice in a revealed preference context
Is There an Allais Paradox? A Note on its Resolution
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Empirical testing of the expected utility model
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Probability Transformations In The Study Of Behavior Toward Risk
Problèmes d'assurance et utilité décumulative
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Exposition of a New Theory on the Measurement of Risk
Liquidity Preference as Behavior Towards Risk
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The Utility Analysis of Choices Involving Risk
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The theory of decision making
| Unique citing works | 18 |
|---|---|
| Citations per year | 0,38 |
| Citation span | 1978 - 2025 (48) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 17 |