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The new models of decision in risk: A review of the critical literature

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  • Trabelsi, Mohamed Ali

Abstract

The aim of the risk decision theory is to describe the behavior of agents in the face of several random prospects. Since it is difficult to describe these preferences, we seek to represent them. The use of a representative function of preferences has been for a long time, the usual method of describing behavior in a random context. The obvious advantage of this method is that it allows including these data in a formalized model and, by extension, to understand the optimization process underlying any decision. The determination of the representative function of preferences must be based on an axiomatic basis. From these axioms, an accurate specification of the value function will be derived. The purpose of this article is to examine the history of theories that have sought to determine a satisfactory criterion for responding to the risk decision problem and to analyze the contribution of these models.

Suggested Citation

  • Trabelsi, Mohamed Ali, 2019. "The new models of decision in risk: A review of the critical literature," MPRA Paper 92693, University Library of Munich, Germany, revised 2019.
  • Handle: RePEc:pra:mprapa:92693
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    File URL: https://mpra.ub.uni-muenchen.de/92693/1/MPRA_paper_92693.pdf
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    References listed on IDEAS

    as
    1. Kimball, Miles S, 1990. "Precautionary Saving in the Small and in the Large," Econometrica, Econometric Society, vol. 58(1), pages 53-73, January.
    2. Trabelsi, Mohamed Ali, 2006. "Les nouveaux modèles de décision dans le risque et l’incertain : quel apport ?
      [The new models of decision under risk or uncertainty : What approach?]
      ," MPRA Paper 25442, University Library of Munich, Germany.
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    5. Trabelsi, Mohamed Ali, 2008. "Les nouveaux modèles de décision dans le risque et l’incertain : quel apport ?
      [The new models of decision under risk or uncertainty: What approach?]
      ," MPRA Paper 83347, University Library of Munich, Germany, revised 2008.
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    More about this item

    Keywords

    Risk Aversion; Expected Utility (EU); Rank Dependent Expected Utility (RDEU); Gamble;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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