Empirical Rules of Thumb for Choice under Uncertainty
AbstractA substantial body of empirical evidence shows that individuals overweight extreme events and act in conflict with the expected utility theory. These findings were the primary motivation behind the development of the rank-dependent utility theory. The purpose of this paper is to demonstrate that some plausible empirical rules of thumb for choice under uncertainty can be rationalized by the rank-dependent utility theory.
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Bibliographic InfoPaper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number 22-2002.
Length: 8 pages
Date of creation: May 2002
Date of revision:
rank-dependent utility; maximin; maximax; mid-range;
Other versions of this item:
- Rolf Aaberge, 2011. "Empirical rules of thumb for choice under uncertainty," Theory and Decision, Springer, vol. 71(3), pages 431-438, September.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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