Abstract
This paper provides a new axiomatization of rank-dependent expected utility by relaxing tradeoff consistency to hold only when the involved outcomes are equally likely. The resulting weakened variant of tradeoff consistency is considerably simpler and intuitively more appealing than the original condition. Consequently, an improved tool for empirical studies and the elicitation of utilities is provided. It turns out that in the presence of weak ordering, simple-continuity, and stochastic dominance, the new tradeoff consistency for equally likely outcomes is sufficient to derive rank-dependent expected utility for general lotteries. © 2001 Elsevier Science B.V.
Original language | English |
---|---|
Pages (from-to) | 483-491 |
Number of pages | 8 |
Journal | Journal of Mathematical Economics |
Volume | 35 |
Issue number | 4 |
DOIs | |
Publication status | Published - Jul 2001 |
Keywords
- D81
- Equally likely outcomes
- Rank-dependent expected utility
- Tradeoff consistency