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Persistent link: https://www.econbiz.de/10005809632
The Becker-DeGroot-Marschak mechanism is widely used to elicit decisionmakers' selling prices of lotteries. This mechanism leads, however, to the preference reversal phenomenon, which seemed to indicate nontransitive preferences. To solve this puzzle, Karni and Safra (1987) introduced a new...
Persistent link: https://www.econbiz.de/10005678218
In this article we study behaviorally consistent stopping rules in an unbounded search from a known distribution with no recall and with positive search cost. We show that if the searcher's preferences are quasi-convex in the probabilities, then behaviorally consistent search strategies in the...
Persistent link: https://www.econbiz.de/10005809679
A well-known theorem of Blackwell states that, when quantity of information is properly defined, every expected utility decisionmaker prefers more information to less; for more general preferences, however, the theorem is no longer true. In this article, we investigate the extent to which...
Persistent link: https://www.econbiz.de/10005809686
Wakker (1991) and Puppe (1990) point out a mistake in theorem 1 in Segal (1989). This theorem deals with representing preference relations over lotteries by the measure of their epigraphs. An error in the theorem is that it gives wrong conditions concerning the continuity of the measure. This...
Persistent link: https://www.econbiz.de/10005709774
This paper discusses two problems. (1) What happens to the conditional risk premium that a decisionmarker is willing to pay out of the middle prize in a lottery to avoid uncertainty concerning the middle prize outcome, when the probabilities of other prizes change? (2) What happens to the...
Persistent link: https://www.econbiz.de/10005678168
A decision maker's attitude towards risk is said to be of order (i), (i) = 1, 2, if for every given risk (e) with expected value zero, the risk premium the decision maker is willing to pay to avoid the risk (te) goes with (t) to zero at the same order as t[superscript i]. This article presents...
Persistent link: https://www.econbiz.de/10005542711