Abstract
The idea of expected utility, to transform payments into their utilities before calculating expectation, traces back at least to Bernoulli (1738). It is a very natural idea to transform, analogously, probabilities. This paper gives heuristic visual arguments to show that the, at first sight, natural way to do this, at second thought seems questionable. At second thought a sound and natural way is the way of anticipated utility, as indicated by Quiggin (1982).
The research has been made possible by a fellowship of the Royal Netherlands Academy of Arts and Sciences.
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Wakker, P. (1989). Transforming Probabilities without Violating Stochastic Dominance. In: Roskam, E.E. (eds) Mathematical Psychology in Progress. Recent Research in Psychology. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-83943-6_2
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