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A process approach to the utility for gambling

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Abstract

This paper argues that any specific utility or disutility for gambling must be excluded from expected utility because such a theory is consequential while a pleasure or displeasure for gambling is a matter of process, not of consequences. A (dis)utility for gambling is modeled as a process utility which monotonically combines with expected utility restricted to consequences. This allows for a process (dis)utility for gambling to be revealed. As an illustration, the model shows how empirical observations in the Allais paradox can reveal a process disutility of gambling. A more general model of rational behavior combining processes and consequences is then proposed and discussed.

Suggested Citation

  • Marc Le Menestrel, 2001. "A process approach to the utility for gambling," Economics Working Papers 570, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:570
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    Citations

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    Cited by:

    1. Marc Le Menestrel, 2003. "A one-shot Prisoners’ Dilemma with procedural utility," Economics Working Papers 819, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Le Menestrel, Marc & Van Wassenhove, Luk N., 2004. "Ethics outside, within, or beyond OR models?," European Journal of Operational Research, Elsevier, vol. 153(2), pages 477-484, March.
    3. Diecidue, E. & Schmidt, U. & Wakker, P.P., 2000. "A Theory of the Gambling Effect," Other publications TiSEM c975e1b4-2319-429d-a68e-f, Tilburg University, School of Economics and Management.
    4. Marc Le Menestrel & Luk Van Wassenhove, 2001. "The Domain and Interpretation of Utility Functions: An Exploration," Theory and Decision, Springer, vol. 51(2), pages 329-349, December.
    5. Bruno S. Frey & Alois Stutzer, 2001. "Beyond Bentham – Measuring Procedural Utility," CESifo Working Paper Series 492, CESifo.
    6. Bruno Frey & Matthias Benz & Alois Stutzer, 2004. "Introducing Procedural Utility: Not Only What, but Also How Matters," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(3), pages 377-401, September.
    7. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
    8. Martijn J. Burger & Martijn Hendriks & Emma Pleeging & Jan C. Ours, 2020. "The joy of lottery play: evidence from a field experiment," Experimental Economics, Springer;Economic Science Association, vol. 23(4), pages 1235-1256, December.
    9. Bruno S. Frey & Alois Stutzer, 2005. "Beyond outcomes: measuring procedural utility," Oxford Economic Papers, Oxford University Press, vol. 57(1), pages 90-111, January.
    10. Martin Chegere & Paolo Falco & Marco Nieddiu & Lorenzo Pandolfi & Mattea Stein, 2022. "It’s a Sure Win! Experimental evidence on overconfidence in betting behavior," CSEF Working Papers 655, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    11. Mowen, John C. & Fang, Xiang & Scott, Kristin, 2009. "A hierarchical model approach for identifying the trait antecedents of general gambling propensity and of four gambling-related genres," Journal of Business Research, Elsevier, vol. 62(12), pages 1262-1268, December.
    12. Humphreys, Brad & Perez, Levi, 2011. "Lottery Participants and Revenues: An International Survey of Economic Research on Lotteries," Working Papers 2011-17, University of Alberta, Department of Economics.
    13. Can Xu & Andreas Steiner & Jakob de Haan, 2023. "Does Economic Policy Uncertainty Encourage Gambling? Evidence from the Chinese Welfare Lottery Market," CESifo Working Paper Series 10241, CESifo.
    14. R. Luce & C. Ng & A. Marley & János Aczél, 2008. "Utility of gambling I: entropy modified linear weighted utility," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 36(1), pages 1-33, July.
    15. Matthias Benz & Bruno S. Frey, 2008. "Being Independent is a Great Thing: Subjective Evaluations of Self‐Employment and Hierarchy," Economica, London School of Economics and Political Science, vol. 75(298), pages 362-383, May.
    16. Marc Le Menestrel & Bertrand Lemaire, 2002. "Additive utility with intransitive indifference and without independence: A homogeneous case," Economics Working Papers 628, Department of Economics and Business, Universitat Pompeu Fabra.
    17. repec:cup:judgdm:v:15:y:2020:i:4:p:517-533 is not listed on IDEAS
    18. Brice Corgnet & Roberto Hernán González, 2023. "On The Appeal Of Complexity," Working Papers 2312, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    19. Karelaia, Natalia, 2006. "Thirst for confirmation in multi-attribute choice: Does search for consistency impair decision performance?," Organizational Behavior and Human Decision Processes, Elsevier, vol. 100(1), pages 128-143, May.
    20. Matthias Benz & Alois Stutzer, "undated". "Do Workers Enjoy Procedural Utility?," IEW - Working Papers 127, Institute for Empirical Research in Economics - University of Zurich.
    21. Daniel A. DeCaro & Marci S. DeCaro & Jared M. Hotaling & Joseph G. Johnson, 2020. "Procedural and economic utilities in consequentialist choice: Trading freedom of choice to minimize financial losses," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 15(4), pages 517-533, July.

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    More about this item

    Keywords

    Gambling; expected utility; process utility; rationality; irrationality; consequentialism;
    All these keywords.

    JEL classification:

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

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