Coherent choice functions under uncertainty

Teddy Seidenfeld

Mark J. Schervish

Joseph B. Kadane

pp. 157-176

in: Horacio Arló-Costa, Jeffrey Helzner (eds), Foundations of the decision sciences, Synthese 172 (1), 2010.

Abstract

We discuss several features of coherent choice functions—where the admissible options in a decision problem are exactly those that maximize expected utility for some probability/utility pair in fixed set S of probability/utility pairs. In this paper we consider, primarily, normal form decision problems under uncertainty—where only the probability component of S is indeterminate and utility for two privileged outcomes is determinate. Coherent choice distinguishes between each pair of sets of probabilities regardless the “shape” or “connectedness” of the sets of probabilities. We axiomatize the theory of choice functions and show these axioms are necessary for coherence. The axioms are sufficient for coherence using a set of probability/almost-state-independent utility pairs. We give sufficient conditions when a choice function satisfying our axioms is represented by a set of probability/state-independent utility pairs with a common utility.