On the coefficient of variation as a predictor of risk sensitivity: Behavioral and neural evidence for the relative encoding of outcome variability

Journal of Mathematical Psychology

Volumn 54, Issue 4, 2010, Pages 395-399

  Weber, Elke U ^a  

^a Och Spine at New York Presbyterian Hospitals   (United States)

Author keywords

Axiomatic measurement; Coefficient of variation; Risk return models; Risky choice

Indexed keywords

EID: 77955918172     PISSN: 00222496     EISSN: 10960880     Source Type: Journal    
DOI: 10.1016/j.jmp.2010.03.003     Document Type: Article

References (34)

1. Bateman I., Dent S., Peters E., Slovic P., Starmer C. The affect heuristic and the attractiveness of simple gambles. Journal of Behavioral Decision Making 2007, 20:365-380.
2. Birnbaum M.H., Thompson L.A. Violations of monotonicity in choices between gambles and certain cash. American Journal of Psychology 1996, 109:501-523.
3. Caraco T. On foraging time allocation in a stochastic environment. Ecology 1980, 61:119-128.
4. Cialdini R.B. The science of persuasion. Scientific American 2001, 284:76-81.
5. Cox J.C., Vjollca S. On the coefficient of variation as a criterion for decision under risk. Journal of Mathematical Psychology 2010.
6. Cubitt R.P., Munro A., Starmer C. Testing explanations of preference reversal. Economic Journal 2004, 114:709-726.
7. D'Acremont M., Bossaert P. Neurobiological studies of risk assessment: a comparison of expected utility and mean-variance approaches. Cognitive, Affective, and Behavioral Neuroscience 2008, 8:363-374.
8. Drezner-Levy T., Shafir S. Parameters of variable reward distributions that affect risk sensitivity of honey bees. Journal of Experimental Biology 2007, 210:269-277.
9. Drezner-Levy T., Smith B.H., Shafir S. The effect of foraging specialization on various learning tasks in the honey bee. Behavioral Ecology and Sociobiology 2009, 64:135-148.
10. Edwards W. The theory of decision making. Psychological Bulletin 1954, 41:380-417.
11. Furlong, E. E. (2008). Number cognition and cooperation. Ph.D. dissertation. Department of Psychology, The Ohio State University.
12. Furlong E.E., Opfer J.E. Cognitive constraints on how economic rewards affect cooperation. Psychological Science 2009, 20:11-16.
13. Grether D.M., Plott C.R. Economic theory of choice and the preference reversal phenomenon. American Economic Review 1979, 69:623-638.
14. Hertwig R., Barron G., Weber E.U., Erev I. Decisions from experience and the effect of rare events. Psychological Science 2004, 15:534-539.
15. Kahneman D., Tversky A. Prospect theory: an analysis of decision under risk. Econometrica 1979, 47:263-291.
16. Luce R.D., Weber E.U. An axiomatic theory of conjoint, expected risk. Journal of Mathematical Psychology 1986, 30:188-205.
17. Lichtenstein S., Slovic P. The construction of preference 2006, Cambridge University Press, London.
18. Markowitz H.M. Portfolio selection 1959, Wiley, New York.
19. Marsh B., Kacelnik A. Framing effects and risky decisions in starlings. Proceedings of the National Academy of Science 2002, 99:3352-3355.
20. McCoy A.N., Platt M.L. Risk-sensitive neurons in macaque posterior cingulate cortex. Nature Neuroscience 2005, 8:1220-1227.
21. Samuelson P. Risk and uncertainty: a fallacy of large numbers. Scientia 1963, 98:108-113.
22. Sarin R.K., Weber M. Risk-value models. European Journal of Operations Research 1993, 70:135-149.
23. Shafir S., Bechar A., Weber E.U. Cognition-mediated coevolution: context-dependent evaluations and sensitivity of pollinators to variability in nectar rewards. Plant Systematics and Evolution 2003, 238:195-209.
24. Shafir S., Reich T., Tsur E., Erev I., Lotem A. Perceptual accuracy and conflicting effects of certainty on risk-taking behaviour. Nature 2008, 453:917-920.
25. Starmer C. Developments in non-expected utility theory: the hunt for a descriptive theory of choice under risk. Journal of Economic Literature 2000, 38:332-382.
26. Tversky A., Kahneman D. Advances in prospect theory: cumulative representation of uncertainty. Journal of Risk and Uncertainty 1992, 5:297-323.
27. von Neumann J., Morgenstern O. Theory of games and economic behavior 1947, Princeton University Press, Princeton, NJ. 2nd ed.
28. Weber B., Rangel A., Wibral M., Falk A. The medial prefrontal cortex exhibits money illusion. Proceedings of the National Academy of Science 2009, 106:5025-5028.
29. Weber E.U. Perception matters: psychophysics for economists. Psychology and economics 2004, 165-176. Oxford University Press, Oxford, UK. J. Carrillo, I. Brocas (Eds.).
30. Weber E.U., Johnson E.J. Mindful judgment and decision making. Annual Review of Psychology 2009, 60:53-86.
31. Weber E.U., Hsee C.K. Cross-cultural differences in risk perception but cross-cultural similarities in attitudes towards risk. Management Science 1998, 44:1205-1217.
32. Weber E.U., Milliman R. Perceived risk attitudes: relating risk perception to risky choice. Management Science 1997, 43:122-143.
33. Weber E.U., Shafir S., Blais A. Predicting risk sensitivity in humans and lower animals: risk as variance or coefficient of variation. Psychological Review 2004, 111:430-445.
34. Zipf G.K. Human behavior and the principle of least effort 1949, Addison-Wesley Press, New York.