Strength of Preference and Risky Choice
Operations Research · 1982 · Volume 30 · Issue 5
Abstract
This paper provides conditions under which a utility function under risk can be legitimately interpreted to measure strength of preference between consequences. These conditions require that if a decision maker regards the preference difference between acts a and b to be the same as the preference difference between acts a ′ and b ′ for every state of the world, then the preference difference between a and b should be regarded as equivalent to the preference difference between a ′ and b ′. A key assumption is that a decision maker's preference differences between acts given one state of the world should be independent of common consequences given other states of the world. Usefulness of this result is discussed.
Keywords
851, 854 strength of preference and risky choice
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