We provide a methodology for eliciting utility midpoints from pref- erences, assuming that payoffs are consumption plans and that preferences satisfy a minimal form of additive separability. The methodology does not re- quire any subjective or objective uncertainty. Thus, this construction of utility midpoints allows us to define mixtures of acts in a purely subjective fashion, without making any assumptions as to the decision maker’s reaction to the uncertainty that may be present. This approach makes it possible to provide a simple and fully subjective characterization of the second-order subjective ex- pected utility model, allowing a clear distinction of such model from subjective expected utility.

Randomizing without Randomness

Paolo Ghirardato
;
Daniele Pennesi
2022

Abstract

We provide a methodology for eliciting utility midpoints from pref- erences, assuming that payoffs are consumption plans and that preferences satisfy a minimal form of additive separability. The methodology does not re- quire any subjective or objective uncertainty. Thus, this construction of utility midpoints allows us to define mixtures of acts in a purely subjective fashion, without making any assumptions as to the decision maker’s reaction to the uncertainty that may be present. This approach makes it possible to provide a simple and fully subjective characterization of the second-order subjective ex- pected utility model, allowing a clear distinction of such model from subjective expected utility.
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Subjective Mixture Space · Ambiguity · Second-Order Subjective Expected Utility
Paolo Ghirardato; Daniele Pennesi
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/2318/1727457
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