Theory and Decision

, Volume 51, Issue 2, pp 125-144

First online:

Production under Uncertainty and Choice under Uncertainty in the Emergence of Generalized Expected Utility Theory

  • John QuigginAffiliated withSchool of Economics, Faculty of Economics and Commerce, Australian National University Email author 

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This paper presents a personal view of the interaction between the analysis of choice under uncertainty and the analysis of production under uncertainty. Interest in the foundations of the theory of choice under uncertainty was stimulated by applications of expected utility theory such as the Sandmo model of production under uncertainty. This interest led to the development of generalized models including rank-dependent expected utility theory. In turn, the development of generalized expected utility models raised the question of whether such models could be used in the analysis of applied problems such as those involving production under uncertainty. Finally, the revival of the state-contingent approach led to the recognition of a fundamental duality between choice problems and production problems.

Uncertainty Generalized Expected Utility Production Theory Choice Theory