Disappointment without prior expectation: a unifying perspective on decision under risk

Philippe Delquié () and Alessandra Cillo

Journal of Risk and Uncertainty, 2006, vol. 33, issue 3, 197-215

Abstract: The central idea of Disappointment theory is that an individual forms an expectation about a risky alternative, and may experience disappointment if the outcome eventually obtained falls short of the expectation. We abandon the hypothesis of a well-defined prior expectation: disappointment feelings may arise from comparing the outcome received with anyof the gamble’s outcomes that the individual failed to get. This leads to a new, general form of Disappointment model. It encompasses Rank Dependent Utility with an explicit one-parameter probability transformation, and Risk-Value models with a generic risk measure including Variance, providing a unifying behavioral foundation for these models. Copyright Springer Science + Business Media, LLC 2006

Keywords: Disappointment theory; Rank Dependent utility; Risk-value models; Mean-variance; Expected Utility violations (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (50)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jrisku:v:33:y:2006:i:3:p:197-215

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DOI: 10.1007/s11166-006-0499-4

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