Quantum Decision Theory in Simple Risky Choices

Maroussia Favre, Amrei Wittwer, Hans Rudolf Heinimann, Vyacheslav I. Yukalov and Didier Sornette
Additional contact information
Maroussia Favre: ETH Zürich - Department of Management, Technology, and Economics (D-MTEC)
Amrei Wittwer: University of Zurich - Collegium Helveticum
Hans Rudolf Heinimann: ETH Zurich
Vyacheslav I. Yukalov: Joint Institute for Nuclear Research; D-MTEC, ETH Zurich
Didier Sornette: Swiss Finance Institute; ETH Zürich - Department of Management, Technology, and Economics (D-MTEC)

No 16-09, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Quantum decision theory (QDT) is a novel theory of decision making based on the mathematics of Hilbert spaces, a framework known in physics for its application to quantum mechanics. This framework formalizes the concept of uncertainty and other effects that are particularly manifest in cognitive processes, which makes it well suited for the study of decision making. QDT describes a decision maker's choice as a stochastic event occurring with a probability that is the sum of an objective utility factor and a subjective attraction factor. This article offers a practical guide to researchers who are interested in applying QDT to a data set of binary lotteries in the domain of gains. We find that our results are in good agreement with the quarter law, a quantitative prediction of QDT. We examine gender differences in our sample in order to illustrate how QDT can be used to differentiate between different groups. We find that women in our sample are on average more risk-averse than men, but stress that our sample is too small to generalize this result to the population outside our sample.

Keywords: decision making; quantum decision theory; risk; uncertainty; how-to guide (search for similar items in EconPapers)
JEL-codes: C44 D03 D71 D81 D83 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2016-02
New Economics Papers: this item is included in nep-upt
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp1609

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