When modeling valuation under uncertainty, economists generally prefer expected utility because it has an axiomatic foundation, meaning that the resulting choices will satisfy a number of rationality requirements. In expected utility theory, values are computed by multiplying probabilities of...

Making the best choice when faced with a chain of decisions requires a person to judge both anticipated outcomes and future actions. Although economic decision-making models account for both risk and reward in single-choice contexts, there is a dearth of similar knowledge about sequential...

Procedures are presented that allow the empiricist to estimate and test asset pricing models on limited-liability securities without the assumption that the historical payoff distribution provides a consistent estimate of the market's prior beliefs. The procedures effectively filter return data...

The acknowledged importance of uncertainty in economic decision making has stimulated the search for neural signals that could influence learning and inform decision mechanisms. Current views distinguish two forms of uncertainty, namely risk and ambiguity, depending on whether the probability...

Genes can affect behaviour towards risks through at least two distinct neurocomputational mechanisms: they may affect the value assigned to different risky options, or they may affect the way in which the brain adjudicates between options based on their value. We combined methods from...

Marginal utility theory prescribes the relationship between the objective property of the magnitude of rewards and their subjective value. Despite its pervasive influence, however, there is remarkably little direct empirical evidence for such a theory of value, let alone of its neurobiological...