(joint with Peter J. Hammond)

Abstract: This paper extends previous work on consequentialist decision theory to allow for consequences to accrue at intermediate, non-terminal nodes, implying that each path through a decision tree is mapped to a unique intertemporal consequence stream. By formally linking earlier concepts of consequentialism, prerationality and normal form invariance, we draw on results from Hammond (1988b, 2022) to prove that behaviour is suitably continuous and prerational if and only if there exists an underlying base preference relation that is Bayesian-rational, with a Bernoulli utility index defined over consequence streams. We also permit intermediate consequences to be menu consequences, defined to be a function of the set of consequences that are feasible in the continuation subtree whose initial node is the consequence node. We illustrate how the inclusion of menu consequences enables the prerationalization of a plethora of prima facie “non-consequentialist” behaviour, such as violations of the weak axiom of revealed preference, the independence axiom of expected utility, and “menu effects” such as temptation and regret, among other applications.