Subjective Expected Utility Theory with Costly Actions - Economics ...

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References [1] Chambers, Robert J. and John Quiggin (2000) Uncertainty, Production, Choice, and Agency. Cambridge University Press. [2] Grant, Simon and Edi Karni (2003) “Why Does It Matter that Beliefs and Valuations Be Correctly Represented?” Working Paper, Department of Economics, Johns Hopkins University. [3] Grossman, Sanford J. and Oliver D. Hart (1983) “An Analysis of the Principal-Agent Problem,” Econometrica 51: 7-45. [4] Hart, Oliver and Bengt Holmstrom (1987) “The Theory of Contracts,” in Bewley, Truman (ed.) Advances in Economic Theory, Cambridge University Press, Cambridge. [5] Hildenbrand, Werner (1974) Core and Equilibria of a Large Economy. Princeton University Press: Princeton, NJ. [6] Holmstrom, Bengt (1979) “Moral Hazard and Observability,” The Bell Journal of Economics, 10: 74-91. [7] Karni, Edi (2003) “On the Representation of Beliefs by Probabilities,” Journal of Risk and Uncertainty, 26: 17-38. [8] Karni, Edi (2003a) “Subjective Expected Utility Theory without States of the World,” Working Paper, Department of Economics, Johns Hopkins University. [9] Karni, Edi (2003b) “Axiomatic Foundation of Agency Theory,” Working Paper, Department of Economics, Johns Hopkins University. [10] Karni, Edi and Zvi Safra (2000) “An Extension of a Theorem of von Neumann and Morgenstern with Application to Social Choice Theory,” Journal of Mathematical Economics 34: 315-327. [11] Luce, Duncan R., and David H. Krantz (1971) “Conditional Expected Utility,” Econometrica, 39: 253-271. [12] Mirrlees, James (1974) “Notes on Welfare Economics, Information and Uncertainty,” In M. Balch, D. McFadden, and S. Wu (eds.) Essays in Economic Behavior Under Uncertainty. Amsterdam: North Holland. [13] Mirrlees, James (1976) “The Optimal Structure of Authority and Incentives Within an Organization,” The Bell Journal of Economics 7: 105-131. [14] Quiggin, John and Robert G. Chambers (1998) “A State-Contingent Production Approach to Principal-Agent Problems with an Application to Point-Source Pollution Control,” Journal of Public Economics 70, 441-472. 14
[15] Savage, Leonard, J. (1954) The Foundations of Statistics. New York: John Wiley and Sons. [16] Shavel, Steven (1979) “Risk Sharing and Incentives in the Principal-Agent Relationship,” The Bell Journal of Economics, 10: 55-73. [17] Wakker, Peter, P. (1987) “Subjective Probabilities for State-Dependent Continuous Utility,” Mathematical Social Sciences 14: 289-298. 15
Page 1 and 2: Subjective Expected Utility Theory
Page 3 and 4: It seems, therefore, that an examin
Page 5 and 6: 2.2 The main result For each a 2 A
Page 7 and 8: where, for each E µ S; ¼ (E;a) =
Page 9 and 10: Proof. (i) ) (ii) : Fix an event E
Page 11 and 12: Two actions, a; a 0 2 A are element
Page 13: where (¹a; ¹w) denotes the “out

Subjective Expected Utility Theory with Costly Actions - Economics ...

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