Полагаю, ваш тестовый пример забыл [1,3,4], но он может выглядеть примерно так:
-module(settheory).
-export([combinations/1]).
combinations([]) ->
[];
combinations([H | T]) ->
CT = combinations(T),
[[H]] ++ [[H | L] || L <- CT] ++ CT.
-include_lib("eunit/include/eunit.hrl").
combinations_test() ->
?assertEqual(
combinations([1,2,3,4]),
lists:sort([[1], [2], [3], [4], [1,2], [1,3], [1,4],
[2,3], [2,4], [3,4], [1,2,3], [1,2,4], [1,3,4],
[2,3,4], [1,2,3,4]])),
ok.