Extension of the myopic utility theory

Decision makers must frequently make choices between alternative courses of action. One tool to assist the decision maker in decisions under uncertainty is Subjective Expected Utility. Subjective Expected Utility mathematically captures a decision maker's preferences, and can then be used to assist the decision maker in complex decisions involving risky future states of nature. This dissertation statistically demonstrates the existence of Myopic Utility Theory, which is a generalization of Subjective Expected Utility. Myopic Utility more accurately models the preferences of decision makers, and is more useful in addressing a broader domain of problems. Myopic Utility Theory is treated axiomatically. Three working models are presented, and then tested against 20 subjects acting as decision makers. Most (80%) of the decision makers were Myopic in their preferences. The consequences of ignoring the Myopic effect and using conventional Expected Utility are presented.