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Reconsidering the common ratio effect : the roles of compound independence, reduction, and coalescing
Schmidt, Ulrich; Seidl, Christian - 2014
Common ratio effects should be ruled out if subjects' preferences satisfy compound independence, reduction of compound … lotteries, and coalescing. In other words, at least one of these axioms should be violated in order to generate a common ratio … observation of common ratio effects.We observe that compound independence and reduction of compound lotteries hold, whereas …
Persistent link: https://www.econbiz.de/10010367224
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Reconsidering the common ratio effect: The roles of compound independence, reduction, and coalescing
Schmidt, Ulrich; Seidl, Christian - Institut für Weltwirtschaft (IfW) - 2014
Common ratio effects should be ruled out if subjects' preferences satisfy compound independence, reduction of compound … lotteries, and coalescing. In other words, at least one of these axioms should be violated in order to generate a common ratio … observation of common ratio effects.We observe that compound independence and reduction of compound lotteries hold, whereas …
Persistent link: https://www.econbiz.de/10010886877
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Reconsidering the common ratio effect : the roles of compound independence, reduction, and coalescing
Schmidt, Ulrich; Seidl, Christian - In: Theory and decision : an international journal for … 77 (2014) 3, pp. 323-339
Persistent link: https://www.econbiz.de/10010481151
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Reconsidering the common ratio effect: the roles of compound independence, reduction, and coalescing
Schmidt, Ulrich; Seidl, Christian - In: Theory and Decision 77 (2014) 3, pp. 323-339
Common ratio effects should be ruled out if subjects’ preferences satisfy compound independence, reduction of compound … lotteries, and coalescing. In other words, at least one of these axioms should be violated in order to generate a common ratio … observation of common ratio effects. We observe that compound independence and reduction of compound lotteries hold, whereas …
Persistent link: https://www.econbiz.de/10010959272
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Reverse Common Ratio Effect
Blavatskyy, Pavlo R. - Institut für Volkswirtschaftslehre, … - 2010
The results of a new experimental study reveal highly systematic violations of expected utility theory. The pattern of these violations is exactly the opposite of the classical common ratio effect discovered by Allais (1953). Two recent decision theories— stochastic expected utility theory...
Persistent link: https://www.econbiz.de/10008625739
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Decision Utility Theory: Back to von Neumann, Morgenstern, and Markowitz
Kontek, Krzysztof - Volkswirtschaftliche Fakultät, … - 2010
Prospect Theory (1979) and its Cumulative version (1992) argue for probability weighting to explain lottery choices. Decision Utility Theory presents an alternative solution, which makes no use of this concept. The new theory distinguishes decision and perception utility, postulates a double...
Persistent link: https://www.econbiz.de/10008756284
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The Illusion of Irrationality
Kontek, Krzysztof - Volkswirtschaftliche Fakultät, … - 2009
This short paper shows that the Allais Paradox and the Common Ratio Effect regarded as classic examples of the violation of the Expected Utility Theory Axioms – may be easily explained by assuming that changes in wealth (i.e. gains and losses) are perceived in relative terms. The preference...
Persistent link: https://www.econbiz.de/10008458513
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Theorem of existence of ruptures for mean values on finite numerical segments. Discrete case
Harin, Alexander - Volkswirtschaftliche Fakultät, … - 2011
The proof of the theorem of existence of the ruptures, namely the proof of maximality, is improved. The theorem may be used in economics and explain the well-known problems such as Allais’ paradox. Illustrated examples of ruptures are presented.
Persistent link: https://www.econbiz.de/10009403452
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Asymmetric loss utility: an analysis of decision under risk
Strashny, Alex - EconWPA - 2004
This paper develops a utility model for evaluating lotteries. In estimating utility, risk averse people use an asymmetric loss function. Expected utility is seen as a special case that is a good approximation of the general case in some cases. The model resolves several paradoxes and makes...
Persistent link: https://www.econbiz.de/10005118587
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Mathematical Basis of Quantum Decision Theory
Yukalov, Vyacheslav I.; Sornette, Didier
Following the ideas of Bohr, Von Neumann, and Benioff, we formulate quantum decision theory (QDT) as the quantum-mechanical theory of measurement for probability operators. QDT captures the effect of superposition of composite prospects, including many incorporated intentions. It is based on the...
Persistent link: https://www.econbiz.de/10005162985