Distorted Probabilities and Choice under Risk /
This book provides a systematic, formal treatment of a recently proposed extension of the expected utility model of choice under risk: the so-called rank-dependent utility model. In this approach the representation of preferences is based upon a (generalized) utility function defined on the outcome/...
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| Format: | eBook |
| Language: | English |
| Published: |
Berlin, Heidelberg :
Springer Berlin Heidelberg,
1991.
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| Series: | Lecture notes in economics and mathematical systems ;
363. |
| Subjects: | |
| Online Access: | Connect to the full text of this electronic book |
| Summary: | This book provides a systematic, formal treatment of a recently proposed extension of the expected utility model of choice under risk: the so-called rank-dependent utility model. In this approach the representation of preferences is based upon a (generalized) utility function defined on the outcome/probability-plane. The main purpose of the book is to demonstrate the flexibility of this model with respect to its explanatory power. This is achieved by analyzing a certain subclass of the rank-dependent utility approach which incorporates the notion of price-dependent distortions of probabilities. This particular approach captures an optimistic point of view towards gambling (as can often be observed), whilst being compatible with a suitably formulated concept of risk aversion. The resulting model is used to explain some of the observed behavioral patterns as the Allais-paradox and the behavior described by the Friedman-Savage hypothesis. |
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| Item Description: | Electronic resource. |
| Physical Description: | 1 online resource (viii, 100 pages 2 illustrations) |
| ISBN: | 9783642582035 (electronic bk.) 3642582036 (electronic bk.) |
| ISSN: | 0075-8442 ; |