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Average Utility Maximization: A Preference Foundation

Author

Listed:
  • Amit Kothiyal

    (Max Planck Institute for Human Development, 14195 Berlin, Germany)

  • Vitalie Spinu

    (Anderson School of Management, University of California, Los Angeles, Los Angeles, California 90095)

  • Peter P. Wakker

    (Erasmus School of Economics, Erasmus University, Rotterdam 3000 DR, The Netherlands)

Abstract

This paper provides necessary and sufficient preference conditions for average utility maximization over sequences of variable length. We obtain full generality by using a new algebraic technique that exploits the richness structure naturally provided by the variable length of the sequences. Thus we generalize many preceding results in the literature. For example, continuity in outcomes, a condition needed in other approaches, now is an option rather than a requirement. Applications to expected utility, decisions under ambiguity, welfare evaluations for variable population size, discounted utility, and quasilinear means in functional analysis are presented.

Suggested Citation

  • Amit Kothiyal & Vitalie Spinu & Peter P. Wakker, 2014. "Average Utility Maximization: A Preference Foundation," Operations Research, INFORMS, vol. 62(1), pages 207-218, February.
    • Handle: RePEc:inm:oropre:v:62:y:2014:i:1:p:207-218
    DOI: 10.1287/opre.2013.1230
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    References listed on IDEAS

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    5. Flores-Szwagrzak, Karol, 2022. "Learning by Convex Combination," Working Papers 16-2022, Copenhagen Business School, Department of Economics.
    6. Adam Jonsson, 2023. "An axiomatic approach to Markov decision processes," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 97(1), pages 117-133, February.

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