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

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 …

aggressively bid in auctions and contests. Do people try to trade-off the probability of winning with other basic risk dimensions … the puzzle of equilibrium effort more than risk-neutral Nash equilibrium in experiments …

We consider a standard one-agent decision-making problem under risk and we address the following question: under what … conditions is utility maximization equivalent to 'risk' minimization, where the measure of risk used by the decision-maker is a … conservative coherent risk measure? …

We investigate whether violations of canonical axioms of choice under risk are mistakes or a manifestation of true …

phenomena described by Prospect Theory through a novel reformulation of its primitives. The model accounts for individual … heterogeneity in behavior, employs fewer parameters than Prospect Theory, and retains neurobiological plausibility as a causal model … of the choice process. Our theory makes a series of novel behavioral predictions amenable to future testing and includes …

We report an experimental test of the four touchstones of rationality in choice under risk – utility maximization …, stochastic dominance, expected-utility maximization and small-stakes risk neutrality – with students from one of the best …

risk, such as expected utility theory and prospect theory. Hence, to explain the evidence suggesting that agents are … label affective or perceived risk - are endogenized. Affective decision making (ADM) is a strategic model of choice under … risk where we posit two cognitive processes - the "rational" and the "emotional" process. The two processes interact in a …