Skip to main content
Article thumbnail
Location of Repository

2010a): “Certain and Uncertain Utility: The Allais Paradox and Five Decision Theory Phenomena

By James Andreoni, Charles Sprenger, Muriel Niederle, William Nielson, Matthew Rabin, Joel Sobel, Ulrich Schmidt and Lise Vesterlund

Abstract

In the study of decision making under risk, preferences are assumed to be continuous. We present a model of discontinuous preferences over certain and uncertain outcomes. Using existing parameter estimates for certain and uncertain utility, five important decision theory phenomena are discussed: the certainty effect, experimentally observed probability weighting, the uncertainty effect, extreme experimental risk aversion and quasi-hyperbolic discounting. All five phenomena can be resolved. JEL classification

Topics: Allais Paradox, dynamic inconsistency, risk aversion, uncertainty effect, probability
Year: 2013
OAI identifier: oai:CiteSeerX.psu:10.1.1.352.3114
Provided by: CiteSeerX
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://citeseerx.ist.psu.edu/v... (external link)
  • http://dss.ucsd.edu/~csprenge/... (external link)
  • Suggested articles


    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.