Representations of Uncertainty
- Commodities are distributions on outcomes. Prices are linear functionals of distributions — integration of a function.
- Commodities are random variables — measurable functions of states. Prices are linear functionals of measurable functions — measures on the state space.
The State Preference Model
- $O\quad$ the outcome space
- $S\quad$ the (finite) state space
- $C\quad$ the set of acts — functions from states to outcomes.
- $\succeq\quad$ a preference relation on $C$.
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