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A Strict Stochastic Utility Theorem

Author

Listed:
  • Matthew Ryan

    (Auckland University of Technology)

Abstract

This note strengthens the sufficiency part of Blavatskyy's (2008) {em Stochastic Utility Theorem} and corrects an error in the necessity part. To do so, we introduce the distinction between a {em stochastic utility representation} and a {em strict stochastic utility representation} for binary choice probabilities. Classification-JEL: C0, D8

Suggested Citation

  • Matthew Ryan, 2015. "A Strict Stochastic Utility Theorem," Economics Bulletin, AccessEcon, vol. 35(4), pages 2664-2672.
    • Handle: RePEc:ebl:ecbull:eb-15-00326
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2015/Volume35/EB-15-V35-I4-P267.pdf
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    References listed on IDEAS

    as
    1. David Buschena & David Zilberman, 2008. "Generalized expected utility, heteroscedastic error, and path dependence in risky choice," Journal of Risk and Uncertainty, Springer, vol. 36(2), pages 201-201, April.
    2. Blavatskyy, Pavlo R., 2008. "Stochastic utility theorem," Journal of Mathematical Economics, Elsevier, vol. 44(11), pages 1049-1056, December.
    3. Dagsvik, John K., 2008. "Axiomatization of stochastic models for choice under uncertainty," Mathematical Social Sciences, Elsevier, vol. 55(3), pages 341-370, May.
    4. John D. Hey, 2018. "Experimental investigations of errors in decision making under risk," World Scientific Book Chapters, in: Experiments in Economics Decision Making and Markets, chapter 17, pages 381-388, World Scientific Publishing Co. Pte. Ltd..
    5. Harless, David W & Camerer, Colin F, 1994. "The Predictive Utility of Generalized Expected Utility Theories," Econometrica, Econometric Society, vol. 62(6), pages 1251-1289, November.
    6. Graham Loomes & Ganna Pogrebna, 2014. "Testing for independence while allowing for probabilistic choice," Journal of Risk and Uncertainty, Springer, vol. 49(3), pages 189-211, December.
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    Citations

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    Cited by:

    1. Matthew Ryan, 2021. "Stochastic expected utility for binary choice: a ‘modular’ axiomatic foundation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(2), pages 641-669, September.
    2. Ryan, Matthew, 2017. "Random binary choices that satisfy stochastic betweenness," Journal of Mathematical Economics, Elsevier, vol. 70(C), pages 176-184.
    3. Matthew Ryan, 2018. "Uncertainty and binary stochastic choice," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(3), pages 629-662, May.
    4. Addison Pan, 2022. "Empirical tests of stochastic binary choice models," Theory and Decision, Springer, vol. 93(2), pages 259-280, September.

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    More about this item

    Keywords

    Stochastic choice; Fechner; Expected utility;
    All these keywords.

    JEL classification:

    • C0 - Mathematical and Quantitative Methods - - General
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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