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The projective independence axiom

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Summary

A new axiom for preference orderings over lotteries, called the projective independence axiom, is formulated. Given suitable continuity and monotonicity assumptions, the axiom implies that utility is either in the weighted utility class or is quadratic in probabilities. The betweenness axiom is used to distinguish between these two classes of functions.

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Authors and Affiliations

  1. Department of Economics, University of California, 92717, Irvine, CA, USA

    Soo Hong Chew

  2. Department of Economics, University of Toronto, 150 St. George Street, M5S 1A1, Toronto, Ontario, Canada

    Larry G. Epstein & Uzi Segal

Authors
  1. Soo Hong Chew
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  2. Larry G. Epstein
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  3. Uzi Segal
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Additional information

We gratefully acknowledge the financial support of the National Science Foundation and the Social Sciences and Humanities Research Council of Canada.

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Chew, S.H., Epstein, L.G. & Segal, U. The projective independence axiom. Econ Theory 4, 189–215 (1994). https://doi.org/10.1007/BF01221200

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  • DOI: https://doi.org/10.1007/BF01221200

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