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Data Dispersion in Economics(II) - Inevitability and Consequences of Restrictions

Author

Listed:
  • Alexander Harin

    () (Modern University for the Humanities, Russia)

Abstract

This article reviews and improves the theorems of the existence of restrictions near the boundaries of finite numerical segments and of the probability scale in the presence of non-zero dispersion. The non-zero dispersion may be caused, for example, by the influence of observation noises. Applications of the theorems to experiments, which are typical of the utility theory, are briefly presented. Similar experiments may be associated with the old problems of utility theory, such as the underweighting of high and the overweighting of low probabilities, risk aversion, loss aversion, the Allais paradox, the equity premium puzzle, the "four-fold pattern" paradox, etc. It is shown that the restrictions as the consequences of the theorems should be taken into account in the explanation of such experiments. The restrictions may facilitate such explanations including explanations by utility models.

Suggested Citation

  • Alexander Harin, 2012. "Data Dispersion in Economics(II) - Inevitability and Consequences of Restrictions," Review of Economics & Finance, Better Advances Press, Canada, vol. 2, pages 24-36, November.
  • Handle: RePEc:bap:journl:120403
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    File URL: http://www.bapress.ca/ref/ref-2012-4/1923-7529-2012-04-24-13.pdf
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    Citations

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    Cited by:

    1. Harin, Alexander, 2015. "“Luce problem” and discontinuity of Prelec’s function at p = 1," MPRA Paper 63672, University Library of Munich, Germany.
    2. Alexander HARIN, 2014. "Partially Unforeseen Events. Corrections and Correcting Formulae for Forecasts," Expert Journal of Economics, Sprint Investify, vol. 2(2), pages 69-79.
    3. Harin, Alexander, 2015. "An existence theorem for bounds on the expectation of a random variable. Its opportunities for utility theories. V. 2," MPRA Paper 67071, University Library of Munich, Germany.
    4. Alexander Harin, 2013. "Data dispersion near the boundaries: can it partially explain the problems of decision and utility theories?," Working Papers hal-00851022, HAL.
    5. Harin, Alexander, 2017. "About the minimal magnitudes of measurement’s forbidden zones. Version 1," MPRA Paper 78796, University Library of Munich, Germany.
    6. Harin, Alexander, 2015. "An existence theorem for bounds (restrictions) on the expectation of a random variable. Its opportunities for utility and prospect theories," MPRA Paper 66692, University Library of Munich, Germany.
    7. Harin, Alexander, 2018. "Forbidden zones for the expectation. New mathematical results for behavioral and social sciences," MPRA Paper 86650, University Library of Munich, Germany.
    8. Harin, Alexander, 2017. "Behavioral economics and auto-images of distributions of random variables," MPRA Paper 83025, University Library of Munich, Germany.
    9. Harin, Alexander, 2015. "An existence theorem for restrictions on the mean in the presence of a restriction on the dispersion," MPRA Paper 64646, University Library of Munich, Germany.
    10. Harin, Alexander, 2017. "Can forbidden zones for the expectation explain noise influence in behavioral economics and decision sciences?," MPRA Paper 76240, University Library of Munich, Germany.
    11. Harin, Alexander, 2014. "Is data interpretation in utility and prospect theories unquestionably correct?," MPRA Paper 53880, University Library of Munich, Germany.
    12. Harin, Alexander, 2017. "Some estimations of the minimal magnitudes of forbidden zones in experimental data," MPRA Paper 80319, University Library of Munich, Germany.
    13. Harin, Alexander, 2014. "General correcting formulae for forecasts," MPRA Paper 55283, University Library of Munich, Germany.

    More about this item

    Keywords

    Utility; Probability; Uncertainty; Decision; Economics;

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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