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Abbreviated version published in Mathematical Social Sciences, 38 (1999), 139--156.
December 7, 1997
To allow conditioning on counterfactual events, zero probabilities can be replaced by infinitesimal probabilities that range over a non-Archimedean ordered field. This paper considers a suitable minimal field that is a complete metric space. Axioms similar to those in Anscombe and Aumann (1963) and in Blume, Brandenburger and Dekel (1991) are used to characterize preferences which: (i) reveal unique non-Archimedean subjective probabilities within the field; and (ii) can be represented by the non-Archimedean subjective expected value of any real-valued von Neumann--Morgenstern utility function in a unique cardinal equivalence class, using the natural ordering of the field.
Keywords: Non-Archimedean probabilities, subjective expected utility, Anscombe--Aumann axioms, lexicographic expected utility, conditional probability systems, reduction of compound lotteries.