Desirability (with D. Schmeidler)

Abstract

Pre-Savage decision theory considered subjective probability as an unobservable construct which is equivalent to observable preference over bets. De Finetti proposed a relation over events, called qualitative probability, to replace numerical probability. Savage introduced consequences and acts and showed that preferences on acts is equivalent to maximization of expected utility. We show how preferences over events, called desirability, can be used to derive Savage's probability and utility.