Cobb-Douglas preferences under uncertainty (Q382331)

The problem under consideration is axiomatic foundations of individual preferences which generalize preferences of Cobb-Douglas (CD) type under uncertainty. The choice space is a set of simple real valued measurable functions \(\{\phi ,\varphi ,\dots\}\), called acts, which map elements of an abstract set \textit{S} of ``states of nature'' into a set of consequences (payoffs) given by the interval \((0, \infty)\). The decision maker cannot be sure about what state of nature will occur. The author presents a list of (14) properties (axioms) that a preference relation might satisfy. The main of them is the strong homotheticity axiom. The notion of a CD subjective expected utility (SEU) preference, noted as \(\succeq\) and used by the author, is the next: ``There exists a probability measure \(q \in \Delta \) (the set of all probability measures) such that \(\phi \succeq \varphi \Leftrightarrow\int\ln\phi dq\geq{ \int\ln\varphi dq}\).'' The first theorem sets two equivalent bundles of axioms that characterize this notion. The second theorem characterize a variant of incomplete CD SEU preferences ``\textit{à la} Bewley (2002)'', and the third theorem (main result) ``provides a set of meaningful axioms characterizing Cobb-Douglas min-expected utility preferences''.