Regret aversion and opportunity dependence
This paper provides an axiomatic model of decision making under uncertainty in which the decision maker is driven by anticipated ex post regrets. Our model allows both regret aversion and likelihood judgement over states to coexist. Also, we characterize two special cases, minimax regret with multiple priors that generalizes Savage's minimax regret, and a smooth model of regret aversion.
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- Loomes, Graham & Sugden, Robert, 1982. "Regret Theory: An Alternative Theory of Rational Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 92(368), pages 805-824, December.
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- Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
- Dirk Bergemann & Karl Schlag, 2005. "Robust Monopoly Pricing: The Case of Regret," Economics Working Papers ECO2005/10, European University Institute.
- Linhart, P. B. & Radner, R., 1989. "Minimax-regret strategies for bargaining over several variables," Journal of Economic Theory, Elsevier, vol. 48(1), pages 152-178, June.
- Grandmont, Jean-Michel, 1972. "Continuity properties of a von Neumann-Morgenstern utility," Journal of Economic Theory, Elsevier, vol. 4(1), pages 45-57, February.
- Chamberlain, Gary, 2000. "Econometrics and decision theory," Journal of Econometrics, Elsevier, vol. 95(2), pages 255-283, April.
- Larry G. Epstein, 1999. "A Definition of Uncertainty Aversion," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 579-608.
- Amartya K. Sen, 1971. "Choice Functions and Revealed Preference," Review of Economic Studies, Oxford University Press, vol. 38(3), pages 307-317.
- Myerson, Roger B, 1981. "Utilitarianism, Egalitarianism, and the Timing Effect in Social Choice Problems," Econometrica, Econometric Society, vol. 49(4), pages 883-897, June.
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