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The opportunity-threat theory of decision-making under risk

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  • Pandey, Mohan

Abstract

A new theory of decision-making under risk, the Opportunity-Threat Theory is proposed. Analysis of risk into opportunity and threat components allows description of behavior as a combination of opportunity seeking and threat aversion. Expected utility is a special case of this model. The final evaluation is an integration of the impacts of opportunity and threat with this expectation. The model can account for basic results as well as several “new paradoxes” that refuted cumulative prospect theory in favor of configural weight models. The discussion notes similarities and differences of this model to the configural weight TAX model, which can also account for the new paradoxes.

Suggested Citation

  • Pandey, Mohan, 2018. "The opportunity-threat theory of decision-making under risk," Judgment and Decision Making, Cambridge University Press, vol. 13(1), pages 33-41, January.
    • Handle: RePEc:cup:judgdm:v:13:y:2018:i:1:p:33-41_3
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