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A test of rank-dependent utility in the context of ambiguity

✍ Scribed by Hein Fennema; Peter Wakker

Publisher
Springer
Year
1996
Tongue
English
Weight
913 KB
Volume
13
Category
Article
ISSN
0895-5646

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✦ Synopsis

Experimental investigations of non-expected utility have primarily concentrated on decision under risk Uprobability triangles"). The literature suggests, however, that ambiguity is one of the main causes for deviations from expected utility (EUt. This article investigates the descriptive performance of rank-dependent utility (RDU) in the context of choice under ambiguity. We use the axiomatic difference between RDU and EU to critically test RDU against EU. Surprisingly, the RDU model does not provide any descriptive improvement over EU. Our data suggest other "framing" factors that do provide descriptive improvements over EU.

πŸ“œ SIMILAR VOLUMES

083063 (E12) A test of rank-dependent ut
083063 (E12) A test of rank-dependent utility in the context of ambiguity : Fennema H., Wakker P., Journal of Risk and Uncertainty, 1996, volume 13, nr. 1, pp. 19–35
πŸ“‚ Article πŸ“… 1997 πŸ› Elsevier Science 🌐 English βš– 84 KB

uncertainties at the time of the market, including, for example, damages to all patties, no just to the insured. In all ideal system, premiums depend only on the total damage in a given state, not on its distribution over individuals. In particular, mitigation measures are optimally induced. The dif