The Savage Axioms

The Savage Axioms are a set of mathematical rules used in decision theory to model rational choices under uncertainty. They assume that individuals can assign consistent numerical values to preferences, allowing uncertain outcomes to be compared and ordered logically. These axioms—such as completeness, transitivity, and independence—ensure preferences are coherent and can be represented by a utility function. Essentially, they provide a formal foundation for understanding how rational agents make decisions when faced with risks, enabling consistent and analyzable decision-making frameworks.