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Uncertain Decisions : Bridging Theory and Experiments - Luigi Luini

Uncertain Decisions

Bridging Theory and Experiments

By: Luigi Luini (Editor)

Hardcover

Published: 30th November 1998
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Uncertain Decisions: Bridging Theory and Experiments presents advanced directions of thinking on decision theory - in particular the more recent contributions on non-expected utility theory, fuzzy decision theory and case-based theory. This work also provides theoretical insights on measures of risk aversion and on new problems for general equilibrium analysis. It analyzes how the thinking that underlies the theories described above spills over into real decisions, and how the thinking that underlies these real decisions can explain the discrepancies between theoretical approaches and actual behavior. This work elaborates on how the most recent laboratory experiments have become an important source both for evaluating the leading theory of choice and decision, and for contributing to the formation of new models regarding the subject.

List of Figuresp. xi
List of Tablesp. xiii
Contributorsp. xiv
Introductionp. xix
Non-expected Utility Theoryp. 1
Risk and Uncertainty Aversion with Reference to the Theories of Expected Utility, Rank Dependent Expected Utility, and Choquet Expected Utilityp. 3
Introductionp. 3
Definitions of Risk Aversion, Comparative Risk Aversion, Aversion to Increasing Risk, and Comparative Aversion to Increasing Riskp. 5
Risk Aversion in the Case of the von Neumann-Morgenstern Expected Utility Theory (EUT)p. 7
Risk Aversion in the Case of the Rank Dependent Expected Utility Theory (RDEUT)p. 12
Definitions of Uncertainty Aversion, Comparative Uncertainty Aversion, Aversion to Increasing Uncertainty, and Comparative Aversion to Increasing Uncertaintyp. 24
Uncertainty and Risk Aversion in the Case of the Savage Expected Utility Theory (EUT)p. 27
Uncertainty and Risk Aversion in the Case of the Choquet Expected Utility Theory (CEUT)p. 27
Referencesp. 37
Dynamic Consistency and Non-Expected Utility
Introductionp. 39
Definitionsp. 41
Expected Utility as the Limit of Updated Preferencesp. 42
The Reduction Axiomp. 47
Concluding Remarksp. 49
Referencesp. 51
Ambiguity-Aversion and Non-Additive Probability: Experimental Evidence, Models and Applicationsp. 53
Introductionp. 53
Subjective Expected Utility and the Ellsberg Paradoxp. 54
Conceptions of Ambiguity as Missing Informationp. 56
Experimental Testsp. 56
Formal Models of Ambiguityp. 60
Applications and Speculationsp. 68
Conclusionp. 72
Referencesp. 75
Non-expected Utility Applicationsp. 81
Consumption, Savings and Asset Returns with Non-Expected Utilityp. 83
Introductionp. 83
Intertemporal Utilityp. 85
Riskp. 93
Knightian Uncertaintyp. 100
Referencesp. 105
Estimating (Risk) Preference Functionals Using Experimental Methodsp. 109
Introductionp. 109
Experimental Methodsp. 110
Estimatible Preference Functionalsp. 114
Assumptions about the Data Generating Processp. 119
Estimation Proceduresp. 121
Previous Resultsp. 122
Exploring the Adequacyp. 124
Conclusionsp. 125
Referencesp. 127
Randomisation, Mixed Strategies and the Reduction Axiomp. 129
Introductionp. 129
Individual Decision Making with Non-linear Preferencesp. 130
Mixed Strategies with Non-linear Preferencesp. 135
A Concluding Discussion on the General Perceptual Problems when Reduction Failsp. 142
Referencesp. 145
Experimental Studies of Signaling Gamesp. 147
Introductionp. 147
Game Theory and Experimental Issuesp. 148
Equilibria and Refinementsp. 151
Comparative Staticsp. 157
Subjects Pool Effectsp. 161
Adaptive Behavior and Learningp. 163
Concluding Discussionp. 165
Referencesp. 171
Independence between Events with Non-additive Probabilityp. 175
Introductionp. 175
Definitions of Independence and their Implicationsp. 176
An Alternative Characterization of Independencep. 178
Discussion and Conclusionsp. 180
Referencesp. 181
New departures from classical decision theoryp. 183
Fuzzy Decision Theoryp. 185
Introductionp. 185
Basicsp. 186
The Fuzzy Preference and its Propertiesp. 187
Fuzzy Utility Function on a Convex Setp. 190
Another Proof for Fuzzy Utilityp. 194
Aggregation of Fuzzy Preferencesp. 197
Arrovian Dictator and Fuzzy Preferencesp. 198
Proof of the Dictator Theorem with Fuzzy Preferencesp. 201
Fuzzy Coalitions and Democracyp. 201
Generalized Theorem: Arrow vs Mayp. 206
Referencesp. 211
An Overview of Case-Based Decision Theoryp. 215
Introductionp. 215
Behavioral Theories and Cognitive Plausibilityp. 216
Decision under Uncertaintyp. 218
Epistemological Foundationsp. 222
Repeated Choicep. 224
Aspiration Level Adjustment and Optimalityp. 225
Planningp. 228
Consumer Theoryp. 229
Process-dependent preferencesp. 231
Referencesp. 233
The Recent Advances in Decision Theory under Uncertainty: a Non-Technical Introductionp. 237
Introductionp. 237
First-order and Second-order Measures of Uncertaintyp. 238
A Taxonomy of Decision Theoriesp. 242
Decision Theories and Decision Criteriap. 247
The Scope of Hard Uncertainty Decision Theoryp. 248
The Puzzle of Awarenessp. 249
Time and rationalityp. 251
Learningp. 252
Concluding Remarksp. 253
Referencesp. 254
Value to Real World: the Experimental Contributionp. 261
Decision Theory and Real Decisions: a Research Agendap. 263
Introductionp. 263
Goals as the Primitive Value Conceptp. 266
Specification of Constraints and Resourcesp. 269
Linking Beliefs back to Factsp. 271
Dealing with Ambiguous, Multiple-event Scenariosp. 273
Risk Modification as a Strategyp. 275
Formulating Decision Problemsp. 276
Generating Alternativesp. 278
Bounded Rationality of Decision Makersp. 280
Personality, Emotion and Culturep. 283
Dynamics of Decisions: Learning, Adaptation and Evolutionp. 284
Conclusionsp. 285
Referencesp. 287
Policy and the Use of Laboratory Experimental Methodology in Economicsp. 293
Introductionp. 293
The concept of an institutionp. 294
The creation of simple laboratory auction processesp. 296
Some competing theoriesp. 299
Results and datap. 301
Philosophy and application of experimental methods: an overviewp. 302
A map to the method: the fundamental equationp. 307
Reflections on the issuesp. 308
Referencesp. 317
Buyer and Seller Effect Disentangled. An Experiment on the Microstructure of Demandp. 319
Introductionp. 319
A microstructural approachp. 321
Laboratory proceduresp. 322
Descriptive data analysisp. 324
Final remarksp. 331
Referencesp. 339
Index
Table of Contents provided by Syndetics. All Rights Reserved.

ISBN: 9780792383918
ISBN-10: 0792383915
Audience: Professional
Format: Hardcover
Language: English
Number Of Pages: 351
Published: 30th November 1998
Publisher: Springer
Country of Publication: NL
Dimensions (cm): 23.5 x 15.5  x 2.54
Weight (kg): 1.59