We introduce range utility theory, an integrative behavioral model for uncertain cash flows. The model modifies rank dependent utility, by replacing rank principles with range principles, and extends the domain to time. For gambles played in the future, the model generalizes the probability and...

This paper develops a continuous-time satiation preference with multiple needs and multiple goods. Goods meet different kinds of needs and the degree to which needs are met determines the utility. We derive closed-form solutions to the optimal consumption problems with a class of tractable...

Present equivalents of future payouts elicited from individuals exhibit a high variability in the underlying discount rate, suggesting that multiple factors influence discounting. One such factor --- shown to be robust --- is the magnitude effect, whereby small future payouts are discounted more...

Rank dependent probability weighting---an integral part of cumulative prospect theory---has come to dominate the behavioral modeling of risk preferences in non-strategic settings over the last 40 years. We draw attention to some serious limitations of rank dependence when it comes to...

The classic sequential search problem rewards the decision-maker with the highest sampled value, minus the sampling cost. If the sampling distribution is unknown, then a Bayesian decision-maker faces a complex balance between learning and optionality. We solve the stopping problem of sampling...

Individuals' judgement of probabilities—the likelihood of different events to occur, or the attribution of likely causes to what has occurred—is plagued by numerous biases and errors. This note focuses on Bayesian updating and the base rate neglect, and also provides a brief overview of...

Trend indicators aim to visualize the effect of input assumptions and parameters into model output. Their use is increasingly important, especially when the output is generated by a black box algorithm. We investigate the properties of several trend indicators used in simulation and machine...

We introduce range utility theory for decisions under risk. Two functions are implicated in the representation of preferences: a traditional utility function for wealth---or changes in wealth---and a range distortion function. The latter introduces a local deformation of the utility function on...