Affiliation:
1. Division of the Humanities and Social Sciences, California Institute of Technology, MC 228-77, 1200 E. California Blvd., Pasadena, CA 91125 (e-mail: )
Abstract
An uncertainty-averse agent prefers betting on an event whose probability is known, to betting on an event whose probability is unknown. Such an agent may randomize his choices to eliminate the effects of uncertainty. For what sort of preferences does a randomization eliminate the effects of uncertainty? To answer this question, we investigate an agent's preferences over sets of acts. We axiomatize a utility function, through which we can identify the agent's subjective belief that a randomization eliminates the effects of uncertainty. (JEL D11, D81)
Publisher
American Economic Association
Subject
Economics and Econometrics
Cited by
46 articles.
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