Preferences

Given states (prizes) $A$ and $B$, an Agent can express preferences of the form

For deterministic environments we know all possible states so we can always state preferences in the following way.

$A$ is preffered over $B$

$A$ and $B$ are the same

$B$ is not preferred over $A$ but it would not matter when $A$ is preffered

In a Stochastic Environment however we do not have full information about the states. So we use the states Priors in a lottery.

A set of preferences is called rational iff the following constraints hold:

[!purple-highlight]+ Orderability $A \succ B \vee B \succ A \vee A \sim B$

[!purple-highlight]+ Transitivity $A \succ B \wedge B \succ C \Rightarrow A \succ C$ also see Transitivity

[!purple-highlight]+ Continuity $\boldsymbol{A} \succ B \succ C \Rightarrow(\exists \boldsymbol{p} \cdot[\boldsymbol{p}, \boldsymbol{A} ; \mathbf{1}-\boldsymbol{p}, C] \sim B)$

[!purple-highlight]+ Substitutability $A \sim B \Rightarrow[p, A ; 1-p, C] \sim[p, B ; 1-p, C]$

[!purple-highlight]+ Monotonicity $A \succ B \Rightarrow(p>q) \Leftrightarrow[p, A ; 1-p, B] \succ [q, A ; 1-q, B]$

[!purple-highlight]+ Decomposability Lotteries in a lottery can be decomposed into a big lottery via their probabilities.

$[p, A ; 1-p,[q, B ; 1-q, C]] \sim[p, A ;((1-p) q), B ;((1-p)(1-q)), C]$

For all constraints we could construct an example where an agent would act irrational if the constraint would not hold.

Also see Preferences on Reward Sequences for MDP.