Is There A Plausible Theory for Risky Decisions?
نویسندگان
چکیده
A large literature is concerned with analysis and empirical application of theories of decision making for environments with risky outcomes. Expected value theory has been known for centuries to be subject to critique by St. Petersburg paradox arguments. More recently, theories of risk aversion have been critiqued with calibration arguments applied to concave utility of payoffs. This paper extends the calibration critique to decision theories that represent risk aversion with transformation of probabilities, and thereby makes clear that questioning the plausibility of theories of risk aversion is not synonymous with questioning the plausibility of decreasing marginal utility of money. Testable calibration propositions are derived that apply to dual expected utility theory as well as expected utility theory, cumulative prospect theory, and rank dependent utility theory. Heretofore, calibration critiques of theories of risk aversion have been based on thought experiments. This paper reports real experiments that provide data on the empirical relevance of the calibration critique to evaluating the plausibility of theories of risk aversion. The paper also discusses implications of the data for prospect theory with (editing of) variable reference payoffs and for some recent additions to specialized literature on risky decisions. In addition, the paper reports an experiment with a finite St. Petersburg bet that adds to data inconsistent with risk neutrality.
منابع مشابه
Does the Ability to Make a New Business Need More Risky Choices during Decisions? Evidences for the Neurocognitive Basis of Entrepreneurship
متن کامل
بررسی رابطه بین سرمایه فرهنگی با بروز انواع رفتارهای پر خطر در بین دانشجویان دانشگاه یزد
Abstract Background:and goals: university students in a society form an active and vast group whose social and mental health is affected by different factors and is prone to social risks and defects. this study tries to evaluate the relationship between the social capital and its triple dimensions (subjective cultural capital, objective cultural capital, characteristic cultural capital) in Bour...
متن کاملSexual Risk Behaviors Constructed in Iranian Women’s Life with Substance Use Disorders: A New Implication of Human Ecological Theory
Background: Drug abuse is one of the important variables influencing protective sexual behavior. The objective of this study was to explore how risky sexual behaviors develop in drug abusing women using human ecological theory.Methods: In this study, we used a descriptive exploratory approach. The participants were 32 drug abusing women from two of the selected drop-in centers (DICs) in south T...
متن کاملThe boundaries of instance-based learning theory for explaining decisions from experience.
Most demonstrations of how people make decisions in risky situations rely on decisions from description, where outcomes and their probabilities are explicitly stated. But recently, more attention has been given to decisions from experience where people discover these outcomes and probabilities through exploration. More importantly, risky behavior depends on how decisions are made (from descript...
متن کاملThe Effectiveness of the Harm Reduction Group Therapy Based on Bandura's Self-Efficacy Theory on Risky Behaviors of Drug-Dependent Sex Worker Women
Background: The aim of this study was to investigate the effectiveness of the harm reduction group therapy based on Bandura's self-efficacy theory on risky behaviors of sex workers in Kerman, Iran.Methods: A quasi-experimental two-group design (a random selection with pre-test and post-test) was used. A risky behaviors questionnaire was used to collect. The sample was selected among sex workers...
متن کامل