Theory and Decision

, Volume 67, Issue 4, pp 405–432 | Cite as

Living without state-independence of utilities

  • Brian Hill


This article is concerned with the representation of preferences which do not satisfy the ordinary axioms for state-independent utilities. After suggesting reasons for not being satisfied with solutions involving state-dependent utilities, an alternative representation shall be proposed involving state-independent utilities and a situation-dependent factor. The latter captures the interdependencies between states and consequences. Two sets of axioms are proposed, each permitting the derivation of subjective probabilities, state-independent utilities, and a situation-dependent factor, and each operating in a different framework. The first framework involves the concept of a decision situation—consisting of a set of states, a set of consequences and a preference relation on acts; the probabilities, utilities and situation-dependent factor are elicited by referring to other, appropriate decision situations. The second framework, which is technically related, operates in a fixed decision situation; particular “subsituations” are employed in the derivation of the representation. Possible interpretations of the situation-dependent factor and the notion of situation are discussed.


Elicitation Subjective probability Subjective expected utility State-dependent utility Small worlds 

JEL Classification

D81 C60 


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Copyright information

© Springer Science+Business Media, LLC. 2008

Authors and Affiliations

  1. 1.GREGHEC, HEC ParisJouy-en-JosasFrance

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