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Non-Expected Utility Theories

  1. Robert F. Bordley1,2

Published Online: 14 JAN 2011

DOI: 10.1002/9780470400531.eorms0627

Wiley Encyclopedia of Operations Research and Management Science

Wiley Encyclopedia of Operations Research and Management Science

How to Cite

Bordley, R. F. 2011. Non-Expected Utility Theories. Wiley Encyclopedia of Operations Research and Management Science. .

Author Information

  1. 1

    General Motors Research and Development Labs, Warren, Michigan

  2. 2

    University of Michigan, Industrial and Operations Engineering Department, Ann Arbor, Michigan

Publication History

  1. Published Online: 14 JAN 2011

Abstract

In this article nonexpected utility theories are reviewed, which focuses on four controversial axioms underlying Savage's subjective expected utility theory. For each axiom, we present practical concerns raised by each axiom along with Savage's defense of that axiom. We then discuss efforts to address these problems that are consistent with Savage's axioms (which we refer to as paradigm preserving) as well as efforts to address these problems that relax or violate Savage's axioms (which we refer to as paradigm shifting.) We conclude that this tension between paradigm-preserving versus paradigm-shifting approaches to address problems in Savage's formulation has been invaluable.

Keywords:

  • paradigm-preserving;
  • paradigm-shifting;
  • Savage's Sure-Thing Principle;
  • common-consequence effect;
  • Hamiltonian mechanics