This book presents a self-contained, comprehensive, and unified treatment of the theory of decision making under uncertainty with state-dependent preferences. The author begins by setting forth axiomatic foundations of subjective expected utility theory with state-dependent preferences. He then develops measures of risk and risk aversion for state-dependent utility functions, and shows how they can be applied to decisions involving health and life insurance. For readers who are primarily interested in an intuitive understanding of the results, the author demonstrates them both verbally and with diagrams. For more mathematically inclined readers, he presents rigorous proofs in the last section of each chapter.