ECONOMIC CHOICE IN GENERALIZED EXPECTED UTILITY-THEORY

Generalized expected utility models have enjoyed considerable success in explaining observed choices under uncertainty. However, there has b een only limited progress in deriving comparative static results. This paper presents a general framework which permits the incorporation of a wide range of generalized expected utility models, but is sufficien tly powerful to permit the derivation of comparative static results. T he central idea is to represent preferences by the expected utility of a transformed probability distribution.