Using a system of axioms, this paper develops a general utility model of other-regarding preferences when opponents are unfamiliar, but they are not strictly anonymous in the sense that they may share some history. Based on two key axioms, an individual’s preferences over a vector of probability distributions are additively separable in the decision maker’s own outcome and each opponent’s outco...

We provide a characterization of the consequences of the assumption that a decision maker with a given utility function is Choquet rational : She maximizes expected utility, but possibly with respect to non-additive beliefs, so that her preferences are represented by Choquet expected utility (CEU). The characterization shows that this notion of rationality allows in general to rationalize more ...

Building upon the works of Anscombe and Amuann [Ann. Math. Stat. 34 (1963) 199] and Karni and Schmeidler [An expected utility theory for state-dependent preferences. Working Paper 48-80, Foerder Institute for Economic Research, Tel Aviv University], we develop a general axiomatic theory of quantifiable beliefs—a form of probabilistic sophistication that does not preclude state-dependent prefere...

There exist several characterizations of concavity for univariate functions. One of them states that a function is concave if and only if it has nonincreasing differences. This definition provides a natural generalization of concavity for multivariate functions called inframodularity. Inframodular transfers are defined and it is shown that a finite lottery is preferred to another by all expecte...

We investigate the impact of a non-financial background risk ε̃ on the preference rankings between two independent financial risks z̃1 and z̃2 for an expected-utility maximizer. More precisely, we provide necessary and sufficient conditions for the alternative (x0 + z̃1, y0 + ε̃) to be preferred to (x0 + z̃2, y0 + ε̃) whenever (x0 + z̃1, y0) is preferred to (x0 + z̃2, y0). Utility functions that preserv...

Many people vote in large elections with costs to vote although the expected benefits would seem to be infinitesimal to a rational mind. We show that prospect and regret theories cannot solve this paradox of not voting and may even aggravate it. However, if the possibility of a decisive vote comes to mind, expected utility maximizers will doubt their preference for abstention and greatly overes...

Individuals often have only incompletely known preferences when choosing between pair-wise gambles. Particular presentations of the choice problem may then passively encourage the use of some choice method to clarify the preference. Different presentational displays can then lead to choice patterns predicted by one or other Generalised Expected Utility theory. When a preference is not or cannot...

This paper develops a framework to link the expected utility analysis to real options models in order to capture the joint effects of risk aversion and irreversibility associated with real investments. It aims at modifying the theory of investment under uncertainty by incorporating decision makers’ risk preferences and allows explicitly analyzing the impacts of risk aversion, uncertainty and ir...

A model for decision making that generalizes Expected Utility Maximization is presented. This model, Expected Qualitative Utility Maximization, encompasses the Maximin criterion. It relaxes both the Independence and the Continuity postulates. Its main ingredient is the definition of a qualitative order on nonstandard models of the real numbers and the consideration of nonstandard utilities. Exp...

The de Finetti Theorem on exchangeable predictive priors is generalized to a framework where preference is represented by Choquet expected utility with respect to a belief function (a special capacity). The resulting model provides behavioral foundations for the decision-maker’s subjective theory of the environment in which there are factors common to all experiments (or sources of uncertainty)...