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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
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
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Uzi Segal, 1986.
"Some Remarks on Quiggin's Anticipated Utility,"
UCLA Economics Working Papers
392, UCLA Department of Economics.
- Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56, pages 279.
- Diecidue, E. & Wakker, P.P., 2000.
"On the Intuition of Rank-Dependent Utility,"
2000-74, Tilburg University, Center for Economic Research.
- Quiggin, John, 1987. "Decision weights in anticipated utility theory : Response to Segal," Journal of Economic Behavior & Organization, Elsevier, vol. 8(4), pages 641-645, December.
- Kahneman, Daniel & Tversky, Amos, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Econometric Society, vol. 47(2), pages 263-91, March.
- Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
- Ramsey, Frank P., 1926. "Truth and Probability," Histoy of Economic Thought Chapters, in: Braithwaite, R. B. (ed.), The Foundations of Mathematics and other Logical Essays, chapter 7, pages 156-198 McMaster University Archive for the History of Economic Thought.
- Quiggin John & Wakker Peter, 1994.
"The Axiomatic Basis of Anticipated Utility: A Clarification,"
Journal of Economic Theory,
Elsevier, vol. 64(2), pages 486-499, December.
- Quiggin, J. & Wakker, P., 1992. "The Axiomatic Basis of Anticipated Utility: A Clarification," Papers 9203, Tilburg - Center for Economic Research.
- Quiggin, J. & Wakker, P., 1992. "The Axiomatic Basis of Anticipated Utility : A Clarification," Discussion Paper 1992-3, Tilburg University, Center for Economic Research.
- Quiggin, John, 1982. "A theory of anticipated utility," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 323-343, December.
- Kelsey, D., 1991.
"Choice Under Partial Uncertainty,"
91-19, Department of Economics, University of Birmingham.
- Quiggin, John & Horowitz, John, 1995. "Time and Risk," Journal of Risk and Uncertainty, Springer, vol. 10(1), pages 37-55, January.
- Yaari, Menahem E, 1987. "The Dual Theory of Choice under Risk," Econometrica, Econometric Society, vol. 55(1), pages 95-115, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alessandra Calosso).
If references are entirely missing, you can add them using this form.