The value of perfect information in nonlinear utility theory

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Abstract

Wakker (1988) has recently shown that, in contrast to an expected utility maximizer, the value of information will sometimes be negative for an agent who violates the independence axiom of expected utility theory. We demonstrate, however, that the value of perfect information will always be nonnegative if the agent satisfies a weak dominance axiom. This result thus mitigates to some degree the normative objection to nonlinear utility theory implicit in Wakker's finding.

Original languageEnglish (US)
Pages (from-to)127-131
Number of pages5
JournalTheory and Decision
Volume30
Issue number2
DOIs
StatePublished - Mar 1 1991

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Keywords

  • Value of perfect information
  • nonlinear utility

ASJC Scopus subject areas

  • Decision Sciences(all)
  • Developmental and Educational Psychology
  • Arts and Humanities (miscellaneous)
  • Applied Psychology
  • Social Sciences(all)
  • Economics, Econometrics and Finance(all)
  • Computer Science Applications

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