EconPapers    
Economics at your fingertips  
 

Preference Cloud Theory: Imprecise Preferences and Preference Reversals

Oben Bayrak () and John Hey ()

No 2015:9, CERE Working Papers from CERE - the Center for Environmental and Resource Economics

Abstract: This paper presents a new theory, called Preference Cloud Theory, of decision-making under uncertainty. This new theory provides an explanation for empirically-observed Preference reversals. Central to the theory is the incorporation of preference imprecision which arises because of individuals’ vague understanding of numerical probabilities. We combine this concept with the use of the Alpha model (which builds on Hurwicz’s criterion) and construct a simple model which helps us to understand various anomalies discovered in the experimental economics literature that standard models cannot explain.

Keywords: Imprecise Preferences; Preference Reversals; Decision under Uncertainty; Anomalies in Expected Utility Theory (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-hpe, nep-mic and nep-upt
Date: 2015-09-08
References: Add references at CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.cere.se/se/forskning/publikationer/672- ... rence-reversals.html (application/pdf)

Related works:
Working Paper: Preference Cloud Theory: Imprecise Preferences and Preference Reversals (2015) Downloads
Working Paper: Preference Cloud Theory: Imprecise Preferences and Preference Reversals (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:hhs:slucer:2015_009

Access Statistics for this paper

More papers in CERE Working Papers from CERE - the Center for Environmental and Resource Economics
Series data maintained by Mona Bonta Bergman ().

 
Page updated 2017-06-22
Handle: RePEc:hhs:slucer:2015_009