Expected utility without full transitivity

Abstract

Abstract. We generalize the classical expected-utility criterion by weakening transitivity to Suzumura consistency. In the absence of full transitivity, reflexivity and completeness no longer follow as a consequence of the system of axioms employed and a richer class of rankings of probability distributions results. This class is characterized by means of standard expected-utility axioms in addition to Suzumura consistency. An important feature of some members of our new class is that they allow us to soften the negative impact of wellknown paradoxes without abandoning the expected-utility framework altogether. Journal of Economic Literature Classification No.: D81.

Suzumura‐consistent relations: An overview

“…The characterization of the generalized expected-utility criterion is presented in the following theorem, the proof of which can be found in Bossert and Suzumura (2015). See also Kreps (1988).…”

“…As mentioned earlier in this section, suitable choices from the class of decision rules characterized in Theorem 3 rule out essentially all possibly problematic reversals. The following two examples are taken from Bossert and Suzumura ().…”