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Expected utility without full transitivity

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Abstract

We generalize the classical expected-utility criterion by weakening transitivity to Suzumura consistency. In the absence of full transitivity, reflexivity and completeness no longer follow as a consequence of the system of axioms employed and a richer class of rankings of probability distributions results. This class is characterized by means of standard expected-utility axioms in addition to Suzumura consistency. An important feature of some members of our new class is that they allow us to soften the negative impact of so-called paradoxes that involve preference reversals without abandoning the expected-utility framework altogether.

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Acknowledgments

We thank Clemens Puppe, an associate editor and a referee for their valuable comments on an earlier version of the paper. Financial support from a Grant-in-Aid for Specially Promoted Research from the Ministry of Education, Culture, Sports, Science and Technology of Japan for the Project on Economic Analysis of Intergenerational Issues (grant number 22000001), the Fonds de Recherche sur la Société et la Culture of Québec, and the Social Sciences and Humanities Research Council of Canada is gratefully acknowledged.

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Authors and Affiliations

  1. Department of Economics and CIREQ, University of Montreal, Station Downtown, P.O. Box 6128, Montreal, QC, H3C 3J7, Canada

    Walter Bossert

  2. School of Political Science and Economics, Waseda University, 1-6-1 Nishi-Waseda, Shinjuku-ku, Tokyo, 169-8050, Japan

    Kotaro Suzumura

Authors
  1. Walter Bossert
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  2. Kotaro Suzumura
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Correspondence to Walter Bossert.

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Bossert, W., Suzumura, K. Expected utility without full transitivity. Soc Choice Welf 45, 707–722 (2015). https://doi.org/10.1007/s00355-015-0876-5

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  • DOI: https://doi.org/10.1007/s00355-015-0876-5

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