A Theory of Vague Expected Utility
AbstractWe propose a new theory of choice between lotteries, which combines an 'economic’ view of decision making - based on a rational, though incomplete, ordering - with a 'psychological’ view - based on heuristics. This theory can explain observed violations of EU theory, namely all cyclical patterns of choice as well as violations of independence.
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Bibliographic InfoPaper provided by EconWPA in its series Game Theory and Information with number 0304003.
Length: 27 pages
Date of creation: 17 Apr 2003
Date of revision: 16 Jul 2004
Note: Type of Document - pdf; prepared on IBM PC - PC-TEX; to print on HP; pages: 27; figures: included
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incomplete preference relation; cyclical preferences; expected utility;
Other versions of this item:
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-04-21 (All new papers)
- NEP-CBE-2003-04-21 (Cognitive & Behavioural Economics)
- NEP-GTH-2003-04-21 (Game Theory)
- NEP-MIC-2003-04-21 (Microeconomics)
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- Paola Manzini & Marco Mariotti, 2008. "On the Representation of Incomplete Preferences Over Risky Alternatives," Theory and Decision, Springer, vol. 65(4), pages 303-323, December.
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