Many Good Choice Axioms: When Can Lotteries Be Treated as Money
نویسنده
چکیده
Without the Independence Axiom, a weaker substitution axiom, “ADI,” is necessary for the preferences over money lotteries induced by the money metric utility function to be well behaved. Given ADI, the agent’s preferences over manygood lotteries can be reconstructed from knowledge of preferences over money lotteries and over sure multivariate outcomes. Moreover, other substitution properties of underlying many-good lottery preferences are inherited by the money lottery preferences. We analyze the formal and intuitive nature of ADI and conclude that analysis of choice under uncertainty without AD1 cannot be one dimensional. Journal of Economic Literature Classification Numbers: D80, Dgl. 8 1992 Academic
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