Comparison of the valuations of alternatives based on cumulative prospect theory and almost stochastic dominance
There are commonly accepted and objective decision rules, which are consistent with rationality, for example the stochastic dominance rules. But, as can be seen in many research studies in behavioural economics, decision makers do not always act rationally. Relatively new tools which model real choices are the cumulative prospect theory rules and the almost stochastic dominance rules. Both models take into account some behavioural factors. The aim of this paper is to explore the consistency between the valuation of random decision alternatives based on cumulative prospect theory and almost stochastic dominance. Both criteria allow the comparison of all elements of the set of random decision alternatives. In a case of the almost second stochastic dominance, it is possible due to its particular properties, which the ordinary stochastic dominance rule does not possess.
Year of publication: |
2012
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Authors: | Renata Dudzińska-Baryła ; Michalska, Ewa |
Published in: |
Operations Research and Decisions. - Wydział Informatyki i Zarządzania. - Vol. 22.2012
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Publisher: |
Wydział Informatyki i Zarządzania |
Subject: | cumulative prospect theory | almost stochastic dominance | decision analysis |
Saved in:
freely available