When a utility function is state-dependent, ex ante preferences for acts cannot elicit unique subjective probabilities without auxiliary devices. This paper introduces ex-post strength-of-preferences for state-contingent decision outcomes. Then we prove that a consistency condition between ex...

This paper studies necessary and sufficient preference-based conditions for differentiability of risk averse (prudent, or temperate) von Neumann-Morgenstern utility functions. The very idea to devise those conditions is based on the reverse claim of an old observation by Arrow that a risk-averse...

Higher-order differentiability is one of the common properties of von Neumann Morgenstern (vNM) utility functions used in economic applications. In particular, it is indispensable to analyze higher-order attitudes toward risk. We shall study three classes of finite-order differentiable vNM...

Unlike the traditional normative decision theories under risk, we are concerned with a unary relation, interpreted as subjective acceptability judgment, on the set of all joint probability distributions over two-attributed decision outcomes, where the first attribute describes final wealth...

Properties of a binary choice probability function p defined on multiattributed outcomes are studied to represent p as a transformation of additive difference evaluations of receiving and foregone outcomes into the unit interval. We use an algebraic assumption to obtain an additive difference...

In a static Lucas's tree economy, we explore the effect of two types of background risk, uninsurable risk for labor income and miscalibrated risk for payoff distribution of risky asset, on the equilibrium price of the risky asset. Then we analyze the data of U.S. stock market and GDP growth...