Empirical research often requires a method how to convert a deterministic economic theory into an econometric model. A popular method is to add a random error term on the utility scale. This method, however, violates stochastic dominance. A modification of this method is proposed to avoid...

Geometric utility theory is proposed for modeling decision making under risk and uncertainty. If a decision maker's preferences satisfy four standard behavioral assumptions (completeness, transitivity, continuity and the independence axiom) then they admit a geometric utility representation....