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  • December 1988
  • Article
  • Journal of Risk and Uncertainty

Ordinal Independence in Non-Linear Utility Theory

By: Jerry R. Green and Bruno Jullien
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Abstract

Individual behavior under uncertainty is characterized using a new axiom, ordinal independence, which is a weakened form of the von Neumann-Morgcnslern independence axiom. It states that if two distributions share a tail in common, then this tail can be modified without altering the individual's preference between these distributions. Preference is determined by the tail on which the distributions differ. This axiom implies an appealing and simple functional form for a numerical representation of preferences. It generalizes the form of anticipated utility, and it explains some well-known forms of behavior, such as the Friedman-Savage paradox, that anticipated utility cannot.

Keywords

Preferences

Citation

Green, Jerry R., and Bruno Jullien. "Ordinal Independence in Non-Linear Utility Theory." Journal of Risk and Uncertainty 1, no. 4 (December 1988): 355–387.
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About The Author

Jerry R. Green

Negotiation, Organizations & Markets
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More from the Authors
  • Two Representations of Information Structures and Their Comparisons By: Jerry R. Green and Nancy L. Stokey
  • Search Diversion and Platform Competition By: Andrei Hagiu and Bruno Jullien
  • Assent-maximizing Social Choice By: Katherine A. Baldiga and Jerry R. Green
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