Abstract
State-dependent preferences pertains to situations involving decision making in the face of uncertainty, in which the states resolving the uncertainty are of direct concern to the decision maker, and affect his or her evaluation of the consequences. The presence of state-dependent preferences raises fundamental issues concerning the representation of the decision maker’s preference relations and, in particular, the definition and interpretation of subjective probabilities. These difficulties are explained and an approach to resolving them is discussed.
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Karni, E. (2018). State-Dependent Preferences. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_1690
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DOI: https://doi.org/10.1057/978-1-349-95189-5_1690
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