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Expectations, Disappointment, and Rank-Dependent Probability Weighting

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  • Philippe Delquié

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  • Alessandra Cillo

Abstract

We develop a model of Disappointment in which disappointment and elation arise from comparing the outcome received, not with an expected value as in previous models, but rather with the other individual outcomes of the lottery. This approach may better reflect the way individuals are liable to experience disappointment. The model obtained accounts for classic behavioral deviations from the normative theory, offers a richer structure than previous disappointment models, and leads to a Rank-Dependent Utility formulation in a transparent way. Thus, our disappointment model may provide a clear psychological rationale for the subjective transformation of probabilities. Copyright Springer 2006

Suggested Citation

  • Philippe Delquié & Alessandra Cillo, 2006. "Expectations, Disappointment, and Rank-Dependent Probability Weighting," Theory and Decision, Springer, vol. 60(2), pages 193-206, May.
  • Handle: RePEc:kap:theord:v:60:y:2006:i:2:p:193-206
    DOI: 10.1007/s11238-005-4571-3
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    Citations

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    Cited by:

    1. Abdellaoui, Mohammed & Bleichrodt, Han, 2007. "Eliciting Gul's theory of disappointment aversion by the tradeoff method," Journal of Economic Psychology, Elsevier, vol. 28(6), pages 631-645, December.
    2. David Gill & Victoria Prowse, 2012. "A Structural Analysis of Disappointment Aversion in a Real Effort Competition," American Economic Review, American Economic Association, vol. 102(1), pages 469-503, February.
    3. Dan Anderberg & Claudia Cerrone, 2014. "Education, Disappointment and Optimal Policy," CESifo Working Paper Series 5141, CESifo Group Munich.
    4. repec:eee:proeco:v:191:y:2017:i:c:p:170-177 is not listed on IDEAS
    5. Philippe Delquié & Alessandra Cillo, 2006. "Disappointment without prior expectation: a unifying perspective on decision under risk," Journal of Risk and Uncertainty, Springer, vol. 33(3), pages 197-215, December.

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