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Parametric Weighting Functions

  • Enrico Diecidue
  • Ulrich Schmidt
  • Horst Zank

This paper provides behavioral foundations for parametric weighting functions under rankdependent utility. This is achieved by decomposing the independence axiom of expected utility into separate meaningful properties. These conditions allow us to characterize rank-dependent utility with power and exponential weighting functions. Moreover, by restricting the conditions to subsets of the probability interval, foundations of rank-dependent utility with parametric inverse-S shaped weighting functions are obtained.

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Paper provided by Economics, The University of Manchester in its series The School of Economics Discussion Paper Series with number 0622.

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Date of creation: 2006
Date of revision:
Handle: RePEc:man:sespap:0622
Contact details of provider: Postal: Manchester M13 9PL
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