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Heuristics and public policy : decision making under bounded rationality

Dhami, Sanjit S.; Al-Nowaihi, Ali; Sunstein, Cass R. - 2018

How do human beings make decisions when, as the evidence indicates, the assumptions of the Bayesian rationality approach in economics do not hold? Do human beings optimize, or can they? Several decades of research have shown that people possess a toolkit of heuristics to make decisions under...

Persistent link: https://www.econbiz.de/10011926917

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 Neumann-Morgenstern utility function. For choice under risk, this implies …

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

An Alternative Subjective Expected Utility Representation Theorem

Kuzmics, Christoph - 2012

choice the DM can make) can also be rationalized by the DM maximizing her subjective expected utility for some subjective …

Persistent link: https://www.econbiz.de/10013101803

Inferring preferences from choices under uncertainty

Kuzmics, Christoph - 2012

optimal choice (or collection of choices) given this preference relation, there is another preference relation that satisfies … EUOL plus the Savage axioms, for which this choice is also optimal. -- ambiguity ; decision theory ; Knightian uncertainty …

Persistent link: https://www.econbiz.de/10009509223

Abraham Wald's Complete Class Theorem and Knightian Uncertainty

Kuzmics, Christoph - 2017

I study the implications of Abraham Wald's (1947) complete class theorem for decision making under Knightian uncertainty (or ambiguity). Suppose we call someone who uses Wald's approach to statistical decision making a Waldian. A Waldian may then have preferences over acts that are not in...

Persistent link: https://www.econbiz.de/10012972129

Inferring Preferences from Choices Under Uncertainty

Kuzmics, Christoph - 2012

Persistent link: https://www.econbiz.de/10014171994

Organizations, Diffused Pivotality and Immoral Outcomes

Falk, Armin; Szech, Nora - 2013

This paper studies how organizational design affects moral outcomes. Subjects face the decision to either kill mice for money or to save mice. We compare a Baseline treatment where subjects are fully pivotal to a Diffused-Pivotality treatment where subjects simultaneously choose in groups of...

Persistent link: https://www.econbiz.de/10014155602

Time Pressure and Regret in Sequential Search

Klimm, Felix; Kocher, Martin; Opitz, Timm; Schudy, Simeon - 2021

Perceived urgency and regret are common in many sequential search processes; for example, sellers often pressure buyers in search of the best offer, both time-wise and in terms of potential regret of forgoing unique purchasing opportunities. Theoretically, these strategies result in anticipated...

Persistent link: https://www.econbiz.de/10013224079

Prospect Theory and Hedging Risks

Broll, Udo - 2010

The prospect theory is one of the most popular decision-making theories. It is based on the S-shaped utility function, unlike the von Neumann and Morgenstern (NM) theory, which is based on the concave utility function. The S-shape brings in mathematical challenges: simple extensions and...

Persistent link: https://www.econbiz.de/10013142328

A Reason for Unreason : Returns-Based Beliefs in Game Theory

Velu, Chander K. - 2012

all strategies. Using a decision analytic solution concept, Luce's (1959) probabilistic choice model, and 'hyperpriors …

Persistent link: https://www.econbiz.de/10013103491