Journal ArticleDOI
Exposition of a New Theory on the Measurement of Risk
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In this theory, the consideration of cases which are all of the same probability is insisted upon as discussed by the authors, and what remains to be done within the framework of this theory amounts to the enumeration of all alternatives, their breakdown into equi-probable cases and their insertion into corresponding classifications.Abstract:
EVER SINCE mathematicians first began to study the measurement of risk there has been general agreement on the following proposition: Expected values are computed by multiplying each possible gain by the number of ways in which it can occur, and then dividing the sum of these products by the total number of possible cases where, in this theory, the consideration of cases which are all of the same probability is insisted upon. If this rule be accepted, what remains to be done within the framework of this theory amounts to the enumeration of all alternatives, their breakdown into equi-probable cases and, finally, their insertion into corresponding classifications…read more
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Choices, Values, and Frames
Daniel Kahneman,Amos Tversky +1 more
TL;DR: In this paper, the cognitive and psychophysical determinants of choice in risky and risk- less contexts are discussed, and the relation between decision values and experience values is discussed, as well as an approach to risky choice that sketches an approach for decision making that can be seen as the acceptance of a gamble that can yield various outcomes with different probabilities.
Journal ArticleDOI
A perspective on judgment and choice: Mapping bounded rationality.
TL;DR: Determinants and consequences of accessibility help explain the central results of prospect theory, framing effects, the heuristic process of attribute substitution, and the characteristic biases that result from the substitution of nonextensional for extensional attributes.
Journal ArticleDOI
Maps of Bounded Rationality: Psychology for Behavioral Economics
TL;DR: Kahneman as mentioned in this paper made a statement based on worked out together with Shane Federik the quirkiness of human judgment, which was later used in his speech at the Nobel Prize in economics.
Journal ArticleDOI
Risk Aversion and Incentive Effects
Charles A. Holt,Susan K. Laury +1 more
TL;DR: In this article, a menu of paired lottery choices is structured so that the crossover point to the high-risk lottery can be used to infer the degree of risk aversion, and a hybrid utility function with increasing relative and decreasing absolute risk aversion nicely replicates the data patterns over this range of payoffs from several dollars to several hundred dollars.
Journal ArticleDOI
Developments in Non-expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk
TL;DR: A review of recent developments in the economic theory of individual decision making under risk can be found in this article, where the authors assess alternative models in terms of empirical success and theoretical usefulness.
References
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Journal ArticleDOI
An axiomatic approach to measurable utility
I. N. Herstein,John Milnor +1 more
TL;DR: In this article, the topology of the prospect space itself is removed, the previous axioms are weakened, an infinite number of sure prospects are allowed, and the existence of a measurable utility is established.
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