Binary Diversification Characterizes Exact Capacities
Lorenz Hartmann, T. Florian Kauffeldt
Operations Research · 2026 · Volume 74 · Issue 1
Abstract
In this paper, we present the first axiomatic characterization of preferences that can be represented by a Choquet integral with respect to an exact capacity. The characterizing axiom, binary diversification, is novel and reflects an inclination for bets on events, thereby capturing a specific type of ambiguity aversion. Furthermore, we demonstrate that the three capacity classes balanced, exact, and convex fully exhaust all levels of our family of k -nary diversification axioms—a unifying framework for the two most popular definitions of ambiguity aversion. We demonstrate that k -nary diversification has a clear interpretation regarding its dual-self expected utility representation. Finally, we illustrate an implication for multiobjective shortest-path problems to demonstrate that our results can be applied in other research fields in which the Choquet integral is utilized. Funding: L. Hartmann acknowledges financial support from the Swiss National Science Foundation [Grant 200915].
Keywords
Decision Analysis, exact capacities, ambiguity aversion, preference for mixing, Choquet expected utility, Invariant biseparable, Dual-self expected utility
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