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Optimal Cognitive Processes for Lotteries

Author

Listed:
  • Alarie, Y.
  • Dionne, G.

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.

Suggested Citation

  • Alarie, Y. & Dionne, G., 2001. "Optimal Cognitive Processes for Lotteries," Ecole des Hautes Etudes Commerciales de Montreal- 01-02, Ecole des Hautes Etudes Commerciales de Montreal-Chaire de gestion des risques..
    • Handle: RePEc:fth:etcori:01-02
    as

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    References listed on IDEAS

    as
    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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    More about this item

    Keywords

    LOTTERY ; ECONOMIC MODELS ; RISK;
    All these keywords.

    JEL classification:

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

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