The Dual Theory of Choice under Risk
This paper investigates the consequences of the following modification of Expected Utility theory: instead of requiring independence with respect to probability mixtures of risky prospects, require independence with respect to direct mixing of payments o f risky prospects. A new theory of choice under risk- a so-called Dual theory-is obtained. Within this new theory, the following questions are considered: (1) numerical representation of preferences; (2) properties of the utility function; ( 3) the possibility for resolving the "paradoxes" of Expected Utilit y theory; ( 4) the characterization of risk aversion; and (5) comparative statics. The paper ends with a discussion of other non-Expected Utility theories proposed recently. Copyright 1987 by The Econometric Society.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 55 (1987)
Issue (Month): 1 (January)
|Contact details of provider:|| Phone: 1 212 998 3820|
Fax: 1 212 995 4487
Web page: http://www.econometricsociety.org/
More information through EDIRC
|Order Information:|| Web: https://www.econometricsociety.org/publications/econometrica/access/ordering-back-issues Email: |
When requesting a correction, please mention this item's handle: RePEc:ecm:emetrp:v:55:y:1987:i:1:p:95-115. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.