Abstract
It is commonplace to formulate theories of individual decision-making under uncertainty using three sets: the set of states of nature, S, the set of consequences, C, and the set of acts, L. Following Savage (1954) we define nature as the object of concern to the decision–maker and a state of nature as a portrayal of nature leaving no relevant aspect undescribed. A consequence is anything that may happen to a person. An act is a course of action. Each combination of an act fϵL and a state of nature sϵS determines a unique consequence denoted c(f, s) in C. In addition, the theory postulates the existence of a preference relation, ≽, on acts. For our purposes preference relations are taken to be complete and transitive binary relations on L, with the symbol ≽ being interpreted as ‘preferred or indifferent’.
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© 1990 Palgrave Macmillan, a division of Macmillan Publishers Limited
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Karni, E. (1990). State-dependent Preferences. In: Eatwell, J., Milgate, M., Newman, P. (eds) Utility and Probability. The New Palgrave. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20568-4_32
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DOI: https://doi.org/10.1007/978-1-349-20568-4_32
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