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Optimal Cognitive Processes for Lotteries

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  • Y. Alarie
  • G. Dionne

Abstract

The aim of the present paper is to propose a rational model of decision-making for lotteries. The key element of the theory is the use of cognitive processes. The maximization of the degree of confidence associated with each judgment involves different processes. Our contribution explains some major violations of the expected-utility theory for decisions on lotteries.
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Suggested Citation

  • Y. Alarie & G. Dionne, 2001. "Optimal Cognitive Processes for Lotteries," THEMA Working Papers 2001-07, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    • Handle: RePEc:ema:worpap:2001-07
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    References listed on IDEAS

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    1. Machina, Mark J, 1987. "Choice under Uncertainty: Problems Solved and Unsolved," Journal of Economic Perspectives, American Economic Association, vol. 1(1), pages 121-154, Summer.
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    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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