Optimal cognitive processes for lotteries

Yves Alarie and Georges Dionne ()
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Yves Alarie: Université de Montréal

No 01-2, Working Papers from HEC Montreal, Canada Research Chair in Risk Management

Abstract: The aim of the present paper is to propose a rational model of decision-making for lotteries. The key element of the theory is the use of cognitive processes. The maximization of the degree of confidence associated with each judgment involves different processes. Our contribution explains some major violations of the expected-utility theory for decisions on lotteries.

Keywords: Cognitive process; lottery; paradox; bounded rationality; preference reversal; common ratio (search for similar items in EconPapers)
JEL-codes: D80 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2001-03-01
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Related works:
Working Paper: Optimal Cognitive Processes for Lotteries (2001)
Working Paper: Optimal Cognitive Processes for Lotteries (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:crcrmw:2001_002

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