Weighted utility theory with incomplete preferences (Q2243523)

The authors propose an alternative utility axiomatics for decision making under uncertainty. Set \(X = \{ x_1, \dots , x_n \},~ n \geq 3\) is given together with a set of lotteries on the outcomes \(\Delta (X) = \{ p \in R^n_{+} \mid \Sigma_{i=1}^n p(x_i) = 1) \}\) and a strict preference relation \(>\) on \(X\). It is assumed that four axioms, namely strict partial order, Archimedean axiom, betweenness and partial substitution are satisfied. The main result of the paper is the proof of existence of utility function representing the preference relation and the proof of its uniqueness.The results were achieved without completeness and independence axioms. The applicability of the presented theory is illustrated by a portfolio selection problem.