Editorial Review:
In these notes, Professor Kreps surveys the standard models of choice under uncertainty that lie at the heart of microeconomic theory. Choice and preference, ordinal utility, von Neumann-Morganstern utility and utility functions for money, and subjective probability and subjective expected utility are among the standard topics covered. These notes provide a rigorous but accessible introduction to the theory of choice for mathematically inclined undergraduates and/or graduate students in economics, finance, and related disciplines.
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Customer Reviews
Average Customer Rating: 
Kreps can't deal with the empirical(experimental) evidence  2004-11-24
Kreps has written an updated version of Savage's The Foundations of Statistics(1954).Like Savage,he is unable to deal with what Savage called vagueness,what Ellsberg called ambiguity and what John Maynard Keynes called uncertainty in the General Theory(1936)and weight of the evidence in the A Treatise on Probability(1921)in chapters 6 and 26 .Keynes defined an index to measure the extent of the vagueness,ambiguity,uncertainty or weight of the evidence upon which the probability estimates, calculated by the decision maker ,would be based.Letting w equal the weight of the evidence(or the vagueness,ambiguity or uncertainty of the evidence),0<=w<=1.A w=o means that the decision maker is dealing with a situation of ignorance.A w between 0 and 1(0
Start thinking with a decision-theorist mind  2004-03-26
The book seems harmless at the beginning with the mathematical proofs of some binary relations, which require a little bit of logic - and very careful writing down, if you have to turn in the problems as homework. But it gets more and more challenging - and pushes you to use some Real Analysis and Probability Theory concepts to really master the issues presented. This is not a reference book, nor a traditional textbook: it is a collection of lectures on economics of decision. The Von Neumann Morgernstern model is developed in all its magnitude, going further than any game theory textbook. You start to feel the 3 axioms and the numerical representation as second nature! But then, the Aumann/Anscombe and Savage models are introduced, as well as the limitations of the perfect VNM model. Everything you've learned seems to fall apart.
The problem sets are mainly excursions, in the very Kreps' style (if you have read his Course on Microeconomic Theory, you know what half a page problem without any equation is). In general, you don't need economics to get a good grip of the content: it is decision theory, not micro theory. Engineers and mathematicians will love it - and some economists will find it too tough!
Useful, concise, requires some background 2001-02-28
I think this book certainly deserves its good reputation as a primer on the variations and developments of utility theory. It must be noted that the book requires a fair amount of mathematical background that students coming to choice theory from non-economic backgrounds might not have. The book may be almost inscrutable if you are not ready to think mathematically about choice an aren't familiar with mathematic-decision speak. To that reader, I would refer you to a book called "Thinking and Deciding" by Jonathan Baron and/or the Psychology of Judgment and Decision Making by Scott Plous. For a reader with a psychology background such as myself, those were much gentler introductions, although the material in this book is worth mastering if you want to do serious work in the field of decision making research.
Terrific 2001-01-15
A terrific book. If you want a comprehensible introduction to decision theory which includes all the most important stuff (von Neumann-Morgenstern, Savage, Anscombe-Aumann), look no further. You will not find anything else even close.
a splendid book 2000-03-25
I have read this book more than 10 times since I came across it. Every time I read this book, I find something new. This book is based on lecture notes on axiomatic choice theory presented by David Kreps(the author) at the Stanford University. If you want to major in economics, in particular, choice theory, this book will enable you to access this area very easily.
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