Year: 2026
Type: preprint
Abstract: We propose a measure of lottery complexity that combines probabilistic dispersion with dissimilarity between outcomes. Taking degenerate lotteries, which yield a single outcome with certainty, as the simplest alternatives, we measure complexity by proximity to this class. Specifically, for each degenerate lottery, we compute the expected distance between its certain outcome and the lottery's outcomes, and take the minimum across all degenerate lotteries. We provide an axiomatic characterization establishing uniqueness up to positive rescaling, study how complexity changes under outcome compression, and characterize maximally complex lotteries. Finally, we introduce Complexity-Adjusted Expected Utility preferences and characterize adherence to stochastic dominance and strong risk aversion.
Source: arXiv (Cornell University)
Author: Principi, Giulio
Institution: York University
Language: English
Subfield: General Decision Sciences
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7203608581