Reasons for Rank-Dependent Utility Evaluation
Three reasons for why people may evaluate utility in a rank-dependent fashion have been suggested: (a) rank-dependent weighting is a function of perceptual biases and thus not prescriptively defensible; (b) weights are (re)distributed by motivational processes that reflect stable personality characteristics of the decision maker; and (c) weights are (re)distributed as a function of the situation, allowing rank-dependent evaluation to be a rational response to an environment with asymmetric loss functions. By modifying a study by Wakker, Erev, and Weber (1994) we show that all three processes--that is, perceptual biases, individual predispositions in weighting, as well as rational adaptation to an asymmetric loss function--can be involved in rank-dependent weighting. Copyright 1997 by Kluwer Academic Publishers
When requesting a correction, please mention this item's handle: RePEc:kap:jrisku:v:14:y:1997:i:1:p:41-61. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.