Order indifference and rank-dependent probabilities

by U. Segal

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• 21 Currently reading

Published 1990 by Dept. of Economics and Institute for Policy Analysis, University of Toronto in Toronto .
Written in English

Subjects:

• Utility theory -- Mathematical models.,
• Decision making -- Mathematical models.

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Edition Notes

Statement	by Uzi Segal.
Series	Working paper series / Dept. of Economics and Institute for Policy Analysis, University of Toronto -- no. 9008, Working paper series (University of Toronto. Institute for Policy Analysis) -- no. 9008
Contributions	University of Toronto. Institute for Policy Analysis., University of Toronto. Dept. of Economics.
Classifications
LC Classifications	HB135 .S43 1990
The Physical Object
Pagination	21 p. :
Number of Pages	21
ID Numbers
Open Library	OL17291741M

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The remainder of this section will focus on the general rank-dependent utility model, an extension of the SEU model that has emerged as the most widely-studied alternative in connection with the Allais paradox and other violations of the independence axiom that occur in situations where probabilities of events are assumed to be known. ECON HOW TO TAKE RISKS Winter Tues. am January 6, 13, 20, 27, February 3 Sequoyah Professor Mark Machina Economics Bldg. Office Hours: Thur. , This seminar will disuss how one should formulate risky choices, make intelligent decisions in the face of uncertainty, and avoid common pitfalls. We.

This paper next shows that the book-making principle, commonly used to justify additive subjective probabilities, can be modified to agree with nonadditive probabilities. The principle is simply restricted to comonotonic subsets which, as usual, leads to an axiomatization of rank-dependent utility theory. Reduction Invariance and Prelec’s Weighting Functions R. Duncan Luce University of California Irvine Within the framework of separable utility theory, a condition, called reduc-tion invariance, is shown to be equivalent to the 2-parameter family of weighting functions that Prelec () derived from the condition called com-pound invariance. The order of appearance of the set of ten choices (low versus high payouts) for each subject was completely randomized to avoid order effects. An example of one of the decision tasks is shown in Figure 1. For each subject, one of the choices was randomly chosen and paid out.

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