The Sure-Thing Principle

Journal article

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 his separability postulate P2 and his state-independence postulate P3. Once these axioms are introduced, by and large, he does not discuss the principle any more. In this note, 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 axiom; and that they can be explicitly combined in a unified dominance condition that is a candidate formal statement for the Sure-Thing Principle. Based on elementary proofs, our results shed light on some of the most fundamental properties of rational choice under uncertainty. In particular they imply, as corollaries, potential simplifications for Savage’s and the Anscombe-Aumann axiomatizations of Subjective Expected Utility. Most surprisingly perhaps, they reveal that in Savage’s axiomatization, P3 can be weakened to a natural strengthening of so-called Obvious Dominance.

Authors: Baccelli, J; Hartmann, L

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Elsevier
• Journal: Journal of Mathematical Economics
• Volume: 109
• Article number: 102915
• Publication date: 2023-10-31
• Acceptance date: 2023-10-27
• DOI: 10.1016/j.jmateco.2023.102915
• EISSN: 1873-1538
• ISSN: 0304-4068
• Language: English
• Keywords: Subjective Expected Utility; decision theory; State-Wise Dominance; Sure-Thing Principle; Savage