Abstract
This article generalizes Savage's theory to include event-dependent preferences. The state space is partitioned into finitely many events. The induced preferences over consequences are assumed independent of the underlying states within, but not across, these events. This results in an additively separable representation of preferences over acts. The dependence of the preference relation over consequences on the events is represented by event-dependent mappings of the set of consequences onto itself. Given these mappings, the preferences on acts are represented by the expectation of event-dependent utilities on the consequences with respect to unique subjective probabilities on the states.
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Helpful discussions with David Schmeidler are gratefully acknowledged.
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Karni, E. Subjective probabilities and utility with event-dependent preferences. J Risk Uncertainty 5, 107–125 (1992). https://doi.org/10.1007/BF00057566
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DOI: https://doi.org/10.1007/BF00057566