IDEAS home Printed from https://ideas.repec.org/p/rza/ersawp/047.html

Security and Potential Level Preferences with Thresholds

Author

Listed:
  • Alexander Zimper
  • Ulrich Schmidt

Abstract

The security level models of Gilboa (1988) and of Jaffray (1988) as well as the security and potential level model of Cohen (1992) accomodate succesfully classical Allais paradoxa while they offer an interesting explanation for their occurrence. However, experimental data suggest a systematic violation of these models when lotteries with low probabilities of bad or good outcomes are involved. The present paper develops an axiomatic model that allows for thresholds in the perception of security and potential levels. The derived representation of preferences accommodates the observed violations of the original security and potential level models and provides a natural explanation for their occurence. Additionally, a more fundamental problem of the original models is resolved.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Alexander Zimper & Ulrich Schmidt, 2007. "Security and Potential Level Preferences with Thresholds," ERSA Working Paper Series 047, Economic Research Southern Africa.
    • Handle: RePEc:rza:ersawp:047
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    Other versions of this item:

    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rza:ersawp:047. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Maggi Sigg (email available below). General contact details of provider: https://ersawps.org/index.php/working-paper-series/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.