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Stochastic choice and preference reversals

Alós-Ferrer, Carlos; Buckenmaier, Johannes; Garagnani, … - 2020 - This version: December 7th, 2020

The preference reversal phenomenon is one of the most important, long-standing, and widespread anomalies contradicting economic models of decisions under risk. It describes the robust observation of frequent "standard reversals" where long-shot gambles are valued above moderate ones but then the...

Persistent link: https://www.econbiz.de/10012390055

Calibration of quantum decision theory, aversion to large losses and predictability of probabilistic choices

Vincent, Sabine; Jukalov, Vjačeslav I.; Kovalenko, Tatyana - 2016

We present the first calibration of quantum decision theory (QDT) to an empirical data set. The data comprise 91 …) the utility factor with a stochastic version of cumulative prospect theory (logit-CPT), and (b) the attraction factor with …

Persistent link: https://www.econbiz.de/10011516615

Chapter 17. Ambiguity and Nonexpected Utility

Karni, Edi; Maccheroni, Fabio; Marinacci, Massimo - In: Handbook of game theory with economic applications : …, (pp. 901-947). 2015

This chapter reviews developments in the theory of decision making under risk and uncertainty, focusing on models that … “linearity in the probabilities” aspect of expected utility theory to game theory. The chapter consists of two main parts: The …-dependent utility models and cumulative prospect theory. The second part reviews theories of decision making under uncertainty that …

Persistent link: https://www.econbiz.de/10014025442

Chapter 12. Non-Expected Utility Models Under Objective Uncertainty

Quiggin, John - In: Handbook of the economics of risk and uncertainty : volume 1, (pp. 701-728). 2014

Although expected utility (EU) theory is a powerful tool for the analysis of decision under risk, it has long been … generalizations of, EU theory began to appear, most notably prospect theory of Kahneman and Tversky. Dozens of generalized EU models …

Persistent link: https://www.econbiz.de/10014025520

Chapter 2. Rationality and Dynamic Consistency Under Risk and Uncertainty

Hammond, Peter J.; Zank, Horst - In: Handbook of the economics of risk and uncertainty : volume 1, (pp. 41-97). 2014

For choice with deterministic consequences, the standard rationality hypothesis is ordinality, i.e., maximization of a weak preference ordering. For choice under risk (resp. uncertainty), preferences are assumed to be represented by the objectively (resp. subjectively) expected value of a von...

Persistent link: https://www.econbiz.de/10014025530

Chapter 3. The Theory of Risk and Risk Aversion

Meyer, Jack - In: Handbook of the economics of risk and uncertainty : volume 1, (pp. 99-133). 2014

Risk and risk aversion are important concepts when modeling how to choose from or rank a set of random variables. This chapter reviews and summarizes the definitions and related findings concerning risk aversion and risk in both a mean-variance and an expected utility decision model context.

Persistent link: https://www.econbiz.de/10014025529