Expected utility versus the changes in knowledge ahead

European Journal of Operational Research

Volumn 199, Issue 3, 2009, Pages 892-901

  Pope, Robin ^a   Leitner, Johannes ^b   Leopold Wildburger, Ulrike ^b  

^a UNIVERSITY OF BONN   (Germany)

^b UNIVERSITY OF GRAZ   (Austria)

Author keywords

Decision analysis; Decision making; Experimental economics; Heuristics; Primary and secondary satisfactions; Risk; Stages of knowledge ahead theory

Indexed keywords

CUMULATIVE PROSPECT THEORY; DECISION ANALYSIS; EXPECTED UTILITY; EXPECTED UTILITY THEORY; EXPERIMENTAL ECONOMICS; HEURISTICS; PRIMARY AND SECONDARY SATISFACTIONS; QUESTIONNAIRE DATA; SINGLE STAGE;

GAME THEORY; HEURISTIC METHODS; RISK ANALYSIS; RISK PERCEPTION;

DECISION THEORY;

EID: 67349194387     PISSN: 03772217     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.ejor.2009.01.060     Document Type: Article

References (58)

1. Abbink K., Sadrieh A., and Selten R. Money does not induce risk neutral behavior, but binary lotteries do even worse. Theory and Decision 46 (1999) 213-252
2. Albers W. Prominence theory as a tool to model boundedly rational decisions. In: Gigerenzer G., and Selten R. (Eds). Bounded Rationality: The Adaptive Toolbox (2001), MIT Press, Cambridge Massachusetts
3. Albers W., Pope R., Selten R., and Vogt B. Experimental evidence for attractions to chance. German Economic Review 1 (2000) 113-129
4. Allais M. Fondements d'une thTorie positive des choix comportant un risque et critique des postulats et axiomes de l'ecole amTricaine (the foundations of a positive theory of choice involving risk and a criticism of the postulates and axioms of the american school). In: Allais M., and Hagen O. (Eds). Expected Utility Hypotheses and the Allais Paradox: Contemporary Discussions of Decisions under Uncertainty with Allais' Rejoinder (1952), Reidel, Dordrecht
5. Allais M. The general theory of random choices in relation to the invariant cardinal utility function and the specific probability function. The (u, q) model: A general overview. In: Munier B. (Ed). Risk, Decision and Rationality (1988), Reidel, Dordrecht 231-289
6. Bell D. Components of risk aversion. In: Brans J. (Ed). Operational Research (1981), North-Holland, Amsterdam 371-378
7. Bell D. Disappointment in decision making under uncertainty. Operations Research 33 (1985) 1-27
8. Borcherding K., Eppel T., and von Winterfeldt D. Comparison of weighting judgments in multiattribute utility measurement. Management Science 37 (1991) 1603-1619
9. Brandstätter E., Gigerenzer G., and Hertwig R. The priority heuristic making choices without trade-offs. Psychological Review 113 (2006) 409-432
10. Camille N., Coricelli G., Sallet J., Pradat-Diehl P., Duhamel J.-R., and Sirigu A. The involvement of the orbitofrontal cortex in the experience of regret. Science 21 (2004) 1167-1170
11. Caplin A., and Leahy J. Psychological expected utility theory and anticipatory feelings. The Quarterly Journal of Economics 1 (2001) 55-79
12. Coombs C., and Huang L. Tests of a portfolio theory of risk preference. Journal of Experimental Psychology 85 (1970) 23-29
13. Damasio A. Emotion, Reason and the Human Brain (1984), Avon Book, New York
14. Ellsberg D. Classic and current notions of measurable utility. Economic Journal 64 (1954) 528-556
15. Friedman M., and Savage L. The utility analysis of choices involving risk. Journal of Political Economy 56 (1948) 279-304
16. Gale D., and Hellwig M. Incentive-compatible debt contracts: One period problem. Review of Economic Studies 52 (1985) 647-663
17. Gigerenzer G. The adaptive toolbox and life span development: Common questions?. In: Staudinger U., and Lindenberger U. (Eds). Understanding Human Development: Life Span Psychology in Exchange with Other Disciplines (2003), Kluwer, Dordrecht 423-435
18. Hagen O. Rules of behaviour and expected utility theory - Compatibility versus dependence. Theory and Decision 18 (1985) 31-45
19. Harsanyi J. Bayesian decision theory and utilitarian ethics. American Economic Review 68 (1978) 223-228
20. Hart A. Anticipations, Uncertainty and Dynamic Planning (1930), Augustus M. Keeley, Inc., New York
21. Kahneman D., and Tversky A. Prospect theory: An analysis of decision under risk. Econometrica 47 (1979) 263-291
22. Karni E. Subjective expected utility theory without states of the world. Journal of Mathematical Economics 42 (2006) 325-342
23. Kiyotaki N., and Moore J. Credit cycles. Journal of Political Economy 105 (1997) 211-248
24. Knight, F., 1933. Risk, Uncertainty, and Profit. Series of Reprints of Scarce Tracts in Economics and Political Science, vol. 16. London: London School of Economics and Political Science.
25. Langlois R., and Cosgel M. Frank knight on risk, uncertainty and the firm: A new interpretation. Economic Inquiry 31 (1993) 456-465
26. Loomes G., and Sugden R. Regret theory: An alternative theory of rational choice under uncertainty. Economic Journal 92 (1982) 805-824
27. Lopes L. Risk and distributional inequality. Journal of Experimental Psychology: Human Perception and Performance 10 (1984) 465-485
28. Lopes L. What naive decision makers can tell us about risk. In: L. Daboni A.M., and Lines M. (Eds). Recent Developments in the Foundations of Utility and Risk Theory (1986), Reidel, Dordrecht 311-326
29. Luce R., and Raiffa H. Games and Decisions (1957), Wiley, New York
30. Markowitz H. Portfolio Selection: Efficient Diversification of Investments (1959), Wiley, New York
31. Marschak J. Rational behavior, uncertain prospects, and measurable utility. Econometrica 18 (1950) 111-141
32. Mellers B.A., Schwartz K.H., and Ritov I. Decision affect theory: Emotional reactions to the outcomes of risky options. Psychological Science 8 (1997) 423-429
33. Mellers B., Erev I., Fessler D., Hemelrijk C., Hertwig R., Laland K., Scherer K., Seeley T., Selten R., and Tetlock P. Group report: Effects of emotions and social processes on bounded rationality. In: Gigerenzer G., and Selten R. (Eds). Bounded Rationality the Adaptive Tool Box (2001), MIT, Cambridge, Massachusetts
34. Mellers B., Schwartz A., and Ritov I. Emotion-based choice. Journal of Experimental Psychology 128 (1999) 332-345
35. Pope R. The pre-outcome period and the utility of gambling. In: Stigum B.P., and Wenstøp F. (Eds). Foundations of Utility and Risk Theory with Applications (1983), D. Reidel, Dordrecht 37-177
36. Pope R. The utility of gambling and of outcomes: Inconsistent first approximations. In: Hagen O., and Wenstøp F. (Eds). The Utility of Gambling and of Outcomes: Inconsistent First Approximations (1984), D. Reidel, Dordrecht 251-273
37. Pope R. Timing contradictions in von Neumann and Morgenstern's axioms and in savage's sure-thing proof. Theory and Decision 18 (1985) 229-261
38. Pope R. Towards a more precise decision framework, a separation of the negative utility of chance from diminishing marginal utility and the preference for safety. Theory and Decision 39 (1995) 241-265
39. Pope R. Reconciliation with the utility of chance by elaborated outcomes destroys the axiomatic basis of expected utility theory. Theory and Decision 49 (2000) 223-234
40. Pope R. Evidence of deliberate violations of dominance due to secondary satisfactions - Attractions to chance. Homo Economicus 15 (2001) 47-76
41. Pope R. Biasses from omitted risk effects in standard gamble utilities. Journal of Health Economics 23 (2004) 695-735
42. Pope R., Leitner J., and Leopold-Wildburger U. The Knowledge Ahead Approach to Risk (2006), Springer, Berlin
43. Quiggin J. A theory of anticipated utility. Journal of Economic Behavior and Organisation 3 (1982) 323-343
44. Quiggin J. Generalised Expected Utility Theory: The Rank Dependent Model (1993), Kluwer, Boston
45. Ramsey F. Truth and probability reproduced in 1950. In: Braithwaite R.B. (Ed). The Foundations of Mathematics and Other Logical Essays (1926), The Humanities Press, New York 156-184
46. Samuelson P. Probability, utility, and the independence axiom. Econometrica 20 (1952) 670-678
47. Sauermann H., and Selten R. Anspruchsanpassungstheorie der Unternehmung. Zeitschrift für die gesamte Staatswissenschaft 118 (1962) 577-597
48. Savage L. The Foundations of Statistics (1954), John Wiley, New York
49. Schade, C., Kunreuther, H., Kaas, K., 2004. Probability neglect and concern in low probabilities and high stakes. Working Paper, Wharton Risk Management and Decision Processes.
50. Schoemaker P. The expected utility model: Its variants, purposes, evidence and limitations. Journal of Economic Literature 20 (1982) 529-563
51. Selten R. Aspiration adaptation theory. Journal of Mathematical Psychology 42 (1998) 191-214
52. Simon H. A behavioral model of rational choice. Quarterly Journal of Economics 69 (1955) 99-118
53. Simon H. Problem formulation and alternative generation in the decision making process. In: Chikàn A. (Ed). Progress in Decision, Utility and Risk (1991), Kluwer, Dordrecht 77-84
54. Starmer C., and Sugden R. Does the random-lottery incentive system elicit true preferences?. American Economic Review 81 (1991) 971-979
55. Stiglitz J., and Weiss A. Credit rationing in imperfect markets. American Economic Review 71 (1981) 393-410
56. Sunstein C. Terrorism and probability neglect. Journal of Risk and Uncertainty 26 (2003) 121-136
57. Tversky A., and Kahneman D. Advances in prospect theory: Cumulative representation of uncertainty. Journal of Risk and Uncertainty 5 (1992) 297-323
58. von Neumann J., and Morgenstern O. Theory of Games and Economic Behaviour. second ed. (1947), Princeton University Press, Princeton