This is a chapter for the forthcoming Handbook of Rational and Social Choice, Paul Anand, Prasanta Pattanaik, and Clemens Puppe, eds., Oxford University Press, 2008. We review classic normative expected utility theory. Our goal is to frame the subsequent chapters (which consider more modern...

This paper characterizes a family of preference relations over uncertain prospects that (i) are dynamically consistent in the Machina sense and, moreover, for which the updated preferences are also members of this family and (ii) can simultaneously accommodate Ellsberg and Allais type paradoxes....