Empirical Rules of Thumb for Choice under Uncertainty

Rolf Aaberge

ICER Working Papers from ICER - International Centre for Economic Research

Abstract: A substantial body of empirical evidence shows that individuals overweight extreme events and act in conflict with the expected utility theory. These findings were the primary motivation behind the development of the rank-dependent utility theory. The purpose of this paper is to demonstrate that some plausible empirical rules of thumb for choice under uncertainty can be rationalized by the rank-dependent utility theory.

Keywords: rank-dependent utility; maximin; maximax; mid-range (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Pages: 8 pages
Date: 2002-05
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Related works:
Journal Article: Empirical rules of thumb for choice under uncertainty (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:icr:wpicer:22-2002

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