Decisions under imperfect knowledge: The certainty equivalence theory as an alternative to the Von Neumann-Morgenstern theory of uncertainty

摘要: This paper offers a modified version of the certainty equivalence (CE) theory utility for uncertain prospects and new set axioms as its basis. It shows that CE von Neumann-Morgenstern (NM) approaches to uncertainty are opposite in spirit: The approach represents flight from world rules while NM one uncertainty. two differ even their treatment compound actuarially identical simple counterparts.