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Optimal cognitive processes for lotteries

Author

Listed:
  • Yves Alarie

    (Université de Montréal)

  • Georges Dionne

    (HEC Montreal, Canada Research Chair in Risk Management)

Abstract

The aim of the present paper is to propose a rational model of decision-making for lotteries. The key element of the theory is the use of cognitive processes. The maximization of the degree of confidence associated with each judgment involves different processes. Our contribution explains some major violations of the expected-utility theory for decisions on lotteries.

Suggested Citation

  • Yves Alarie & Georges Dionne, 2001. "Optimal cognitive processes for lotteries," Working Papers 01-2, HEC Montreal, Canada Research Chair in Risk Management.
    • Handle: RePEc:ris:crcrmw:2001_002
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    References listed on IDEAS

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    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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