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A conditional expected utility model for myopic decision makers

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Abstract

An expected utility model is formulated and axiomatized which allows the decision maker to specify his actions in the form of partial rather than complete contingency plans, and to simultaneously choose goals and actions in end-mean pairs. Both utility and probability are conditioned on selected goals and actions, and both are defined over the same set of events. For adaptive sequential decision problems this symmetrical treatment of utility and probability permits the expected utility criterion function to be directly updated in each decision period via transitional utility assessments in a manner analogous to Bayes' rule for updating probability distributions.

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Authors and Affiliations

  1. University of Southern California, USA

    Leigh Tesfatsion

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  1. Leigh Tesfatsion
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Additional information

This study is a condensed revised version of discussion papers [14] and [15]. Research underlying this paper was supported by National Science Foundation Grants GS-31276X and GS-35682X. Valuable comments by Professors J. S. Chipman, C. Hildreth, L. Hurwicz, I. Richards, and M. K. Richter are gratefully acknowledged.

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Tesfatsion, L. A conditional expected utility model for myopic decision makers. Theor Decis 12, 185–206 (1980). https://doi.org/10.1007/BF00154361

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