Generalized Similarity Judgments: An Alternative Explanation for Choice Anomalies

Jonathan Leland

Journal of Risk and Uncertainty, 1994, vol. 9, issue 2, 72 pages

Abstract: Rubinstein's (1988) procedure for choosing between risky prospects, based, in part, upon similarities between prizes and probabilities across lotteries, is modified and extended to apply to a more general class of binary choices. This modified procedure is shown to imply behaviors following from Loomes and Sugden's (1982) Regret Theory, although under more general conditions, and provides an alternative explanation for much of the data which led to the specification of Prospect Theory's value and decision weighing functions. The procedure also explains observed violations of stochastic dominance, transitivity, and invariance not accounted for in available alternatives to expected utility. Copyright 1994 by Kluwer Academic Publishers

Date: 1994
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