Abstract
We propose a new theory of choice between lotteries, which combines an 'economic' view of decision making - based on a rational, though incomplete, ordering - with a 'psychological' view - based on heuristics. This theory can explain observed violations of EU theory, namely all cyclical patterns of choice as well as violations of independence.
Original language | English |
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Article number | 10 |
Journal | Topics in Theoretical Economics |
Volume | 4 |
Issue number | 1 |
DOIs | |
Publication status | Published - 2004 |
Bibliographical note
Copyright:Copyright 2018 Elsevier B.V., All rights reserved.
Keywords
- Cyclical preferences
- Expected utility
- Incomplete preference relation