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Generalized Similarity Judgments: An Alternative Explanation for Choice Anomalies

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  • John Leland

Abstract

Rubinstein's (1988) procedure for choosing between risky prospects, based, in part, upon similarities between prizes and probabilities across lotteries, is modified and extended to apply to a more general class of binary choices. This modified procedure is shown to imply behaviors following from Loomes and Sugden's (1982) Regret Theory, although under more general conditions, and provides an alternative explanation for much of the data which led to the specification of Prospect Theory's value and decision weighing functions. The procedure also explains observed violations of stochastic dominance, transitivity, and invariance not accounted for in available alternatives to expected utility. Copyright 1994 by Kluwer Academic Publishers
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  • John Leland, 2010. "Generalized Similarity Judgments: An Alternative Explanation for Choice Anomalies," Levine's Working Paper Archive 7644, David K. Levine.
  • Handle: RePEc:cla:levarc:7644
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    References listed on IDEAS

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    1. Camerer, Colin F, 1989. "An Experimental Test of Several Generalized Utility Theories," Journal of Risk and Uncertainty, Springer, vol. 2(1), pages 61-104, April.
    2. Battalio, Raymond C & Kagel, John H & Jiranyakul, Komain, 1990. "Testing between Alternative Models of Choice under Uncertainty: Some Initial Results," Journal of Risk and Uncertainty, Springer, vol. 3(1), pages 25-50, March.
    3. Tversky, Amos & Kahneman, Daniel, 1986. "Rational Choice and the Framing of Decisions," The Journal of Business, University of Chicago Press, vol. 59(4), pages 251-278, October.
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