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The Axioms of cardinal utility, are the assumption that provide the minimum set of conditions for
consistent and rational behaviour.
Axiom 4 – Measurability. If outcome Y is preferred less than X but more than Z, then there is a
unique  (a probability) such that an individual is indifferent between Y and a gamble between X
with probability  and Z with probability (1-Â).
Axiom 5 – Ranking. If alternatives Y and U both lie somewhere between X and Z and we can
establish gambles such that an individual is indifferent between y and a gamble between X (with
probability â1) and Z, while also indifferent between U and a second gamble, this time between X
(with probability â2) and Z, then if â1 is greater than â2, Y is preferred to U.
Or if â1 = â2, then Y ~ U
The axioms are a cardinal utility boil down to the following assumptions about behaviour:
First – all individuals are assumed to always make completely rational decisions
Second – people are assumed to be able to make these rational choices among thousands of
alternatives.