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The impossibility of compromise: some uniqueness properties of expected utility preferences

Author

Listed:
  • Paolo Ghirardato

    (Division of the Humanities and Social Sciences, California Institute of Technology,Pasadena, CA 91125, USA)

  • Massimo Marinacci

    (Dipartimento di Scienze Economiche, UniversitÁ di Bologna, Piazza Scaravilli 2, 40126 Bologna, ITALY)

Abstract

We focus on the following uniqueness property of expected utility preferences: Agreement of two preferences on one interior indifference class implies their equality. We show that, besides expected utility preferences under (objective) risk, this uniqueness property holds for subjective expected utility preferences in Anscombe-Aumann's (partially subjective) and Savage's (fully subjective) settings, while it does not hold for subjective expected utility preferences in settings without rich state spaces. Indeed, when it holds the uniqueness property is even stronger than described above, as it needs only agreement on binary acts. The extension of the uniqueness property to the subjective case is possible because beliefs in the mentioned settings are shown to satisfy an analogous property: If two decision makers agree on a likelihood indifference class, they must have identical beliefs.

Suggested Citation

  • Paolo Ghirardato & Massimo Marinacci, 2000. "The impossibility of compromise: some uniqueness properties of expected utility preferences," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 16(2), pages 245-258.
    • Handle: RePEc:spr:joecth:v:16:y:2000:i:2:p:245-258
    Note: Received: November 15, 1999; revised version: December 29, 1999
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    Cited by:

    1. Massimo Marinacci, 2002. "Probabilistic Sophistication and Multiple Priors," Econometrica, Econometric Society, vol. 70(2), pages 755-764, March.

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