Abstract
Contrary to common belief, Savage's axioms do not imply strict stochastic dominance. Instead, they usually involve violation of that. Violations occur as soon as the range of the utility function is rich enough, e.g. contains an interval, and the probability measure is, loosely speaking, constructive. An example is given where all of Savage's axioms are satisfied, but still strict statewise monotonicity is violated: An agent is willing to exchange an act for another act that with certainty yields a strictly worse outcome. Thus book can be made against the agent. Weak stochastic dominance and weak statewise monotonicity are always satisfied, as well as strict stochastic dominance and strict statewise monotonicity when restricted to acts with finitely many outcomes.
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.
