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Disappointment without prior expectation: a unifying perspective on decision under risk

  • Philippe Delquié

    ()

  • Alessandra Cillo

The central idea of Disappointment theory is that an individual forms an expectation about a risky alternative, and may experience disappointment if the outcome eventually obtained falls short of the expectation. We abandon the hypothesis of a well-defined prior expectation: disappointment feelings may arise from comparing the outcome received with anyof the gamble’s outcomes that the individual failed to get. This leads to a new, general form of Disappointment model. It encompasses Rank Dependent Utility with an explicit one-parameter probability transformation, and Risk-Value models with a generic risk measure including Variance, providing a unifying behavioral foundation for these models. Copyright Springer Science + Business Media, LLC 2006

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File URL: http://hdl.handle.net/10.1007/s11166-006-0499-4
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Article provided by Springer in its journal Journal of Risk and Uncertainty.

Volume (Year): 33 (2006)
Issue (Month): 3 (December)
Pages: 197-215

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Handle: RePEc:kap:jrisku:v:33:y:2006:i:3:p:197-215
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100299

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  1. Gul, Faruk, 1991. "A Theory of Disappointment Aversion," Econometrica, Econometric Society, vol. 59(3), pages 667-86, May.
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