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An extension of a theorem of von Neumann and Morgenstern with an application to social choice theory. (English) Zbl 0966.91030
Summary: We present an analytical framework and an axiomatic theory of behavior under risk that constitutes an extension of the theory of von Neumann and Morgenstern. The extension entails a relaxation of the mixture space structure of the decision set and requires the restriction of the independence axiom of expected utility theory. We begin with an application to social choice theory which yields an extension of Harsanyi’s impartial observer theorem to the case in which individual preferences do not necessarily satisfy the axioms of expected utility theory. An application to game theory is also discussed.

MSC:
91B14 Social choice
91B08 Individual preferences
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