Subjective Expected Utility with State-Dependent but Action/Observation-Independent Preferences

Abstract

Under state-dependent preferences, probabilities and units of scale of state-dependent utilities are not separately identified. In standard models, only their products matter to decisions. Separate identification has been studied under implict actions by Drèze or under explicit actions and observations by Karni. This paper complements both approaches and relates them when conditional preferences for final outcomes are independent of actions and observations. That special case permits drastic technical simplification while remaining open to some natural extensions

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