Notes on utility theory
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TL;DR
It is established that utility theory cannot serve as a foundation for decision, or any other, theory, because the interpretation of the von Neumann and Morgenstern axioms precludes the possibility of constructing utility scales based on this framework.
Abstract
We establish that utility theory cannot serve as a foundation for decision, or any other, theory. The interpretation of the von Neumann and Morgenstern axioms precludes the possibility of constructing utility scales based on this framework. We point out other problems with utility theory and present a paradox that demonstrates that the interpretation of the utility axioms leads to a contradiction: choices that are accepted are at the same time rejected-based on the same theory - depending on the labels attached to the objects being measured. Furthermore, utility scales do not enable the operations of addition and multiplication.