Expected utility theory (EUT) is currently the standard framework which formally defines rational decision-making under … behaviour under utility theory is incompatible with scarcity of resources, making behaviour consistent with EUT irrational and …

expected utility theory (EUT). Bernoulli’s work is taken up by psychophysics which in turn plays an important role in the … strength for a descriptive theory of rational behavior. A prominent part of contemporary behavioral economics is founded upon … observed. One branch continues Kahneman and Tversky’s search for a descriptive theory of rational behavior and extends the …

risk, such as expected utility theory and prospect theory. Hence, to explain the evidence suggesting that agents are …

paradoxes that models such as prospect theory and regret theory are designed to capture. At the same time, our model is … consistent with modern macroeconomic theory and evidence and generates predictions across a much wider set of domains than these …

This paper presents a new decision theory for modelling choice under risk. The new theory is a two …-parameter generalization of expected utility theory. The proposed theory assumes that a decision maker: 1) behaves as if maximizing expected … lotteries). The proposed theory can rationalize the fourfold pattern of risk attitudes; the common ratio effect and the reverse …