This chapter reviews developments in the theory of decision making under risk and uncertainty, focusing on models that, over the last 40 years, dominated the theoretical discussions. It also surveys some implications of the departures from the “linearity in the probabilities” aspect of...

This chapter provides a critical review of the theories of decision making under risk and under uncertainty and the notion of choice-based subjective probabilities. It includes formal statements and discussions of the various models, including their analytical frameworks, the corresponding...

Wakker (1990) showed that under natural conditions the Choquet expected utility (CEU) and the rank-dependent utility (RDU) models are identical. Invoking Wakker's result and applying the certainty equivalent reduction procedure, this paper shows that risk aversion in the RDU model implies...

Preventive dental care and automotive service is intended to prevent problems that, if they materialized, would require costly treatment or repair. In these markets fraud is both persistent and pervasive. This paper analyzes these markets invoking the notion of weak perfect Bayesian equilibrium...