UTILITY-THEORY WITH PROBABILITY DEPENDENT OUTCOME VALUATION - EXTENSIONS AND APPLICATIONS

This article extends Karni's (1992) Utility Theory with Probability De pendent Outcome Valuation (UTP-DOV) to accommodate a wider set of pref erences, and applies the new representation to a variety of decision p roblems under risk. First, we present a new, more general axiomatizati on of UTPDOV that renders the underlying intuition more transparent. S econd, we develop sufficient conditions under which UTPDOV satisfies t he betweeness and the ordinal independence axioms. Finally, we examine functional forms of the UTPDOV model that are consistent with several well known departures from the independence axiom.