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Three contributions to the theory of decision under uncertainty

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  • Edward J. Green
  • In-Uck Park

Abstract

An intuitively natural consistency condition for contingent plans is necessary and sufficient for a contingent plan to be rationalized by maximization of conditional expected utility. One alternative theory of choice under uncertainty, the weighted-utility theory developed by Chew Soo Hong (1983) does not entail that contingent plans will generally satisfy this condition. Another alternative theory, the minimax theory as formulated by Savage (1972), does entail the consistency condition (at least for singleton-valued plans). ; Earlier title: Bayes contingent plans

Suggested Citation

  • Edward J. Green & In-Uck Park, 1995. "Three contributions to the theory of decision under uncertainty," Working Papers 558, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmwp:558
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    References listed on IDEAS

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    1. Green, Edward J. & Park, In-Uck, 1996. "Bayes contingent plans," Journal of Economic Behavior & Organization, Elsevier, vol. 31(2), pages 225-236, November.
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    More about this item

    Keywords

    Contingency plans;

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