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Nash was a first to axiomatize expected utility

Author

Listed:
  • Han Bleichrodt

    (Erasmus University Rotterdam)

  • Chen Li

    (Erasmus University Rotterdam)

  • Ivan Moscati

    (Insubria University)

  • Peter P. Wakker

    (Erasmus University Rotterdam)

Abstract

Nash is famous for many inventions, but it is less known that he, simultaneously with Marschak, also was the first to axiomatize expected utility for risk. In particular, these authors were the first to state the independence condition, a condition that should have been but was not stated by von Neumann and Morgenstern. Marschak’s paper resulted from interactions with several people at the Cowles Commission. We document unique letters and personal communications with Nash, Samuelson, Arrow, Dalkey, and others, making plausible that Nash made his discovery independently from the others.

Suggested Citation

  • Han Bleichrodt & Chen Li & Ivan Moscati & Peter P. Wakker, 2016. "Nash was a first to axiomatize expected utility," Theory and Decision, Springer, vol. 81(3), pages 309-312, September.
    • Handle: RePEc:kap:theord:v:81:y:2016:i:3:d:10.1007_s11238-016-9542-3
    DOI: 10.1007/s11238-016-9542-3
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    References listed on IDEAS

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    1. Ivan Moscati, 2016. "Retrospectives: How Economists Came to Accept Expected Utility Theory: The Case of Samuelson and Savage," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 219-236, Spring.
    2. Samuelson, Paul A., 1950. "Probability And The Attempts To Measure Utility (English & Japanese)," Economic Review, Hitotsubashi University, vol. 1(3), pages 174-180, July.
    3. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    4. Peter Fishburn & Peter Wakker, 1995. "The Invention of the Independence Condition for Preferences," Management Science, INFORMS, vol. 41(7), pages 1130-1144, July.
    5. Ho-Chyuan Chen & William Neilson, 1999. "Pure-strategy Equilibria with Non-expected Utility Players," Theory and Decision, Springer, vol. 46(2), pages 201-212, April.
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    Cited by:

    1. M. Ali Khan & Metin Uyanık, 2021. "Topological connectedness and behavioral assumptions on preferences: a two-way relationship," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(2), pages 411-460, March.
    2. Kemal Ozbek, 2024. "Expected utility, independence, and continuity," Theory and Decision, Springer, vol. 97(1), pages 1-22, August.
    3. Mark Schneider, 2019. "A Bias Aggregation Theorem," Working Papers 19-03, Chapman University, Economic Science Institute.
    4. Aniruddha Ghosh & Mohammed Ali Khan & Metin Uyanik, 2022. "The Intermediate Value Theorem and Decision-Making in Psychology and Economics: An Expositional Consolidation," Games, MDPI, vol. 13(4), pages 1-24, July.

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