A new axiomatization of rank-dependent expected utility with tradeoff consistency for equally likely outcomes

This paper provides a new axiomatization of rank-dependent expected utility by relaxing tradeoff consistency to hold only when the involved outcomes a re equally likely. The resulting weakened variant of tradeoff consistency i s considerably simpler and intuitively more appealing than the original con dition. Consequently, an improved tool for empirical studies and the elicit ation of utilities is provided. It turns out that in the presence of weak o rdering, simple-continuity, and stochastic dominance, the new tradeoff cons istency for equally likely outcomes is sufficient to derive rank-dependent expected utility for general lotteries. (C) 2001 Elsevier Science B.V. All rights reserved.