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Risk, uncertainty and discrete choice models

  • Andre Palma

    ()

  • Moshe Ben-Akiva
  • David Brownstone
  • Charles Holt
  • Thierry Magnac
  • Daniel McFadden
  • Peter Moffatt
  • Nathalie Picard
  • Kenneth Train
  • Peter Wakker
  • Joan Walker

This paper examines the cross-fertilizations of random utility models with the study of decision making under risk and uncertainty. We start with a description of the Expected Utility (EU) theory and then consider deviations from the standard EU frameworks, involving the Allais paradox and the Ellsberg paradox, inter alia. We then discuss how the resulting Non-EU framework can be modeled and estimated within the framework of discrete choices in static and dynamic contexts. Our objectives in addressing risk and ambiguity in individual choice contexts are to understand the decision choice process, and to use behavioral information for prediction, prescription and policy analysis.

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File URL: http://hdl.handle.net/10.1007/s11002-008-9047-0
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Article provided by Springer in its journal Marketing Letters.

Volume (Year): 19 (2008)
Issue (Month): 3 (December)
Pages: 269-285

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Handle: RePEc:kap:mktlet:v:19:y:2008:i:3:p:269-285
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100312

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  10. Gilboa, Itzhak & Schmeidler, David, 1989. "Maxmin expected utility with non-unique prior," Journal of Mathematical Economics, Elsevier, vol. 18(2), pages 141-153, April.
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