(joint with Lorenz Hartmann, University of Basel)
Abstract: The Sure-Thing Principle famously appears in Savage's axiomatization of Subjective Expected Utility. Yet Savage introduces it only as an informal, overarching dominance condition motivating several of his axioms—most importantly, his separability postulate P2 and his state-independence postulate P3. Once these axioms introduced, he does not discuss the principle further. We pick up the analysis of the Sure-Thing Principle where Savage left it. In particular, we show that each of P2 and P3 is equivalent to a dominance condition; that they strengthen in different directions a common, basic dominance condition; and that they can be explicitly combined in a unified dominance condition that is a candidate formal statement for the Sure-Thing Principle. While all these results are elementary, they shed further light on the most fundamental properties of rational choice under uncertainty. They also imply, as corollaries, potential simplifications for Savage's and the Anscombe-Aumann axiomatizations of Subjective Expected Utility.
The Economic Theory Lunchtime Workshops are convened by Meg Meyer.