Abstract
Abstract One of the basic concepts of economic theory is that of personal preferences, assumed to govern our everyday behaviour. As is well known, if a person’s preferences satisfy certain rationality requirements then they can be repre sented by an ordinal utility function. If they satisfy some even stronger rationality requirements (in choosing between alternative lotteries) such as the von Neumann-Morgenstern (= vN-M) axioms (see von Neumann and Morgenstern 1953), then they can be represented also by vN-M utility functions. The latter have the nature of cardinal utility functions because they permit meaningful comparisons, not only between the relevant person’s utility levels in different situations, but also between his various utility differences in moving from one situation to another. In what follows, I shall assume that people’s preferences satisfy the vN-M axioms.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
