Multiple Periods Destroy the Axiomatic Base of Expected Utility Theory and its Standard Generalisations

It is here shown that the extension of expected utility theory to multiple periods destroys the axiomatic base by introducing timing contradictions in what the chooser knows at a single time point. It is shown that some of these timing contradictions remain even if, as Samuelson (1952) proposed, no segment of the outcome space (to which utility attaches) commences before all risk is passed.

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Year of publication:	2006
Authors:	Pope, Robin
Publisher:	Bonn : University of Bonn, Bonn Graduate School of Economics (BGSE)
Subject:	expected utility theory \| rank dependent theories \| axioms \| single period \| multiple period \| timing contradictions \| degree of knowledge ahead

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Series:	Bonn Econ Discussion Papers ; 30/2006
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	525262148 [GVK] hdl:10419/22974 [Handle] RePEc:zbw:bonedp:302006 [RePEc]
Classification:	D90 - Intertemporal Choice and Growth. General ; D81 - Criteria for Decision-Making under Risk and Uncertainty
Source:	EconStor

Persistent link: https://www.econbiz.de/10010263182