Speaker: Francesco Rocciolo, University of Reading
Title: A new axiomatization of expected utility. The missing link in the classical axiomatic system.
Abstract: This paper introduces a new axiom, named Weak Coherence, which integrates with the classical axiomatic system of expected utility theory. Weak Coherence, formalises the possibility for the decision maker to show different preference orders upon the occurrence of different conditions. The main result is an expected utility representation of preferences over monetary outcomes which rules out all the violations of Expected Utility Theory. At the same time, this is achieved without any impairment of the traditional axioms, which remain locally accommodated. Therefore, the resulting model preserves the normative appeal of expected utility theory while improving dramatically its descriptive power.