Expected utility theory from the frequentist perspective
Hu, Tai-Wei
Expected utility theory from the frequentist perspective created by Tai-Wei Hu - Economic theory Volume 53, number 1 .
We present an axiomatization of expected utility from the frequentist perspective. It starts with a preference relation on the set of infinite sequences with limit relative frequencies. We consider three axioms parallel to the ones for the von Neumann–Morgenstern (vN–M) expected utility theory. Limit relative frequencies correspond to probability values in lotteries in the vN–M theory. This correspondence is used to show that each of our axioms is equivalent to the corresponding vN–M axiom in the sense that the former is an exact translation of the latter. As a result, a representation theorem is established: The preference relation is represented by an average of utilities with weights given by the relative frequencies.
09382259
Objective probability--Frequentist theory of probability--Expected utility theory
Decision theory
HB119 ECO
Expected utility theory from the frequentist perspective created by Tai-Wei Hu - Economic theory Volume 53, number 1 .
We present an axiomatization of expected utility from the frequentist perspective. It starts with a preference relation on the set of infinite sequences with limit relative frequencies. We consider three axioms parallel to the ones for the von Neumann–Morgenstern (vN–M) expected utility theory. Limit relative frequencies correspond to probability values in lotteries in the vN–M theory. This correspondence is used to show that each of our axioms is equivalent to the corresponding vN–M axiom in the sense that the former is an exact translation of the latter. As a result, a representation theorem is established: The preference relation is represented by an average of utilities with weights given by the relative frequencies.
09382259
Objective probability--Frequentist theory of probability--Expected utility theory
Decision theory
HB119 ECO