Preference Paradox and Nonlinear Expected Utility Theory

  • Kazuhisa Takemura


The previous chapter explained that expected utility theory included counterexamples called the Allais paradox (Allais 1953) and the Ellsberg paradox (Ellsberg 1961). The Allais and Ellsberg paradoxes are interpreted as deviations from the independence axiom. This chapter first explains the relations between these paradoxes and the independence axiom.


Subjective Probability Utility Theory Prospect Theory Expect Utility Theory Mental Operation 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Allais, M. (1953). Le comportement de l’homme rationnel devant le risque; critique des postulats et axiomes de l’ecole americaine. Econometrica, 21, 503–546.CrossRefGoogle Scholar
  2. Camerer, C. (1995). Individual decision making. In J. H. Hagel & A. E. Roth (Eds.), Handbook of experimental economics (pp. 587–703). Princeton: Princeton University Press.Google Scholar
  3. Camerer, C. F., Lowenstein, G., & Rabin, M. (Eds.). (2004). Advances in behavioral economics. Princeton: Princeton University Press.Google Scholar
  4. Choquet, G. (1954). Theory of capacities. Annales de l’ Institute Fourier, 5, 131–295.CrossRefGoogle Scholar
  5. Edwards, W. (Ed.). (1992). Utility theories: Measurements and applications. Boston: Kluwer Academic Publishers.Google Scholar
  6. Einhorn, H., & Hogarth, R. (1986). Decision-making under ambiguity. Journal of Business, 59, 225–250.CrossRefGoogle Scholar
  7. Ellsberg, D. (1961). Risk, ambiguity, and the savage axiom. Quarterly Journal of Economics, 75, 643–669.CrossRefGoogle Scholar
  8. Fishburn, P. C. (1988). Nonlinear preference and utility theory. Sussex: Wheatsheaf Books.Google Scholar
  9. Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47, 263–292.CrossRefGoogle Scholar
  10. Murofushi, T., Sugeno, M., & Machida, M. (1994). Nonmonotonic fuzzy measures and choquet integral. Fuzzy Sets and System, 64, 73–86.CrossRefGoogle Scholar
  11. Nakamura, K. (1992). On the nature of intransitivity in human preferential judgments. In V. Novak, J. Ramik, M. Mares, M. Cherny, & J. Nekola (Eds.), Fuzzy approach to reasoning and decision making (pp. 147–162). Dordrecht: Kluwer.CrossRefGoogle Scholar
  12. Quiggin, J. (1993). Generalized expected utility theory: The rank dependent model. Boston: Kluwer Academic Publishers.CrossRefGoogle Scholar
  13. Seo, F. (1994). Shiko no Gijutu: Aimai kankyoka no keiei ishikettei [Thinking techniques: Management decision making under ambiguity environment]. Tokyo: Yuhikaku Publishing.Google Scholar
  14. Slovic, P., & Tversky, A. (1974). Who accepts savage’s axiom? Behavioral Science, 19, 368–373.CrossRefGoogle Scholar
  15. Starmer, C. (2000). Developments in non-expected utility theory: The hunt for descriptive theory of choice under risk. Journal of Economic Literature, 38, 332–382.CrossRefGoogle Scholar
  16. Sugeno, M., & Murofushi, T. (1993). Koza faji 3: Faji sokudo [Course fuzzy 3: Fuzzy measure]. Tokyo: The Nikkan Kogyo Shimbun.Google Scholar
  17. Takemura, K. (1996a). Ishikettei to sono shien [Decision-making and support for decision-making]. In S. Ichikawa (Ed.), Ninchi shinrigaku 4kan shikou [Cognitive psychology, vol. 4: Thoughts] (pp. 81–105). Tokyo: University of Tokyo Press.Google Scholar
  18. Takemura, K. (1996b). Ishikettei no shinri: Sono katei no tankyu [Mentality of decision-making: The quest for the process]. Tokyo: Fukumura Shuppan Inc.Google Scholar
  19. Takemura, K. (2000). Vagueness in human judgment and decision making. In Z. Q. Liu & S. Miyamoto (Eds.), Soft computing for human centered machines (pp. 249–281). Tokyo: Springer.CrossRefGoogle Scholar
  20. Tamura, H., Nakamura, Y., & Fujita, S. (1997). Koyo bunseki no suri to oyo [Mathematical principles and application of utility analysis]. Tokyo: Corona Publishing.Google Scholar
  21. Tversky, A., & Kahneman, D. (1983). Extensional versus intuitive reasoning: The conjunction fallacy in probability judgment. Psychological Review, 90, 293–315.CrossRefGoogle Scholar
  22. Tversky, A., & Kahneman, D. (1992). Advances in prospect theory: Cumulative representation of uncertainty. Journal of Risk and Uncertainty, 5, 297–323.CrossRefGoogle Scholar

Copyright information

© Springer Japan 2014

Authors and Affiliations

  • Kazuhisa Takemura
    • 1
  1. 1.Department of PsychologyWaseda UniversityTokyoJapan

Personalised recommendations