The notion of ‘revealed preference’ is unclear and should be abandoned. Defenders of the theory of revealed preference have misinterpreted legitimate concerns about the testability of economics as the demand that economists eschew reference to (unobservable) subjective states. As attempts to apply revealed-preference theory to game theory illustrate with particular vividness, this demand is mistaken.

Previous edition, 1st, published in 1971.

Though the revised edition of A Theory of Justice, published in 1999, is the definitive statement of Rawls's view, so much of the extensive literature on Rawls's theory refers to the first edition.

Acts are functions from states of nature into finite-support distributions over a set of ‘deterministic outcomes’. We characterize preference relations over acts which have a numerical representation by the functional J(f)=min>∫u∘ f dP¦PϵC where f is an act, u is a von Neumann-Morgenstern utility over outcomes, and C is a closed and convex set of finitely additive probability measures on the states of nature. In addition to the usual assumptions on the preference relation as transitivity, completeness, continuity and monotonicity, we (...) assume uncertainty aversion and certainty-independence. The last condition is a new one and is a weakening of the classical independence axiom: It requires that an act f is preferred to an act g if and only if the mixture of f and any constant act h is preferred to the same mixture of g and h. If non-degeneracy of the preference relation is also assumed, the convex set of priors C is uniquely determined. Finally, a concept of independence in case of a non-unique prior is introduced. (shrink)

One central objection to the maximin payoff criterion is that it focuses on the state that yields the lowest payoffs regardless of how low these are. We allow different states to have different sets of possible outcomes and show that the original axioms of Milnor (1954) continue to characterize the maximin payoff criterion, provided that the sets of payoffs achievable across states overlap. If instead payoffs in some states are always lower than in all others then ignoring the “bad” states (...) is no longer inconsistent with these axioms. Similar dependence on overlap of outcome spaces across states holds for the minimax regret and maximin joy criteria. (shrink)