Normal view MARC view

A Context dependent model of decision making under risk

Author: Mukherjee, Kanchan INSEAD Area: Decision Sciences Series: Working Paper ; 2008/25/DS/EPS Publisher: Fontainebleau : INSEAD, 2008.Language: EnglishDescription: 32 p.Type of document: INSEAD Working Paper Online Access: Click here Abstract: This paper presents a context dependent valuation (CDV) model of decision making under risk where the valuation of a gamble depends not only on its own probability-outcome structure but also on the other gambles that it is compared with. This descriptive model draws motivation from the range-frequency theory (Parducci 1965, 1968) which states that the subjective value given to a stimulus depends on its position as well as its rank in the set of observed stimuli. The CDV model is based on the value maximization paradigm and is shown to explain and predict (1) violation of non-transparent stochastic dominance (while retaining transparent stochastic dominance), (2) procedure invariance in the form of a wide variety of preference reversals and elicitation biases, (3) description invariance in the form of juxtaposition, event splitting and framing effects, and (4) classic phenomena such as the four-fold pattern of risk attitudes, violation of monotonicity, the common consequence effect and the common ratio effect.
Tags: No tags from this library for this title. Log in to add tags.
Item type Current location Collection Call number Status Date due Barcode Item holds
INSEAD Working Paper Digital Library
PDF Available BC008278
Total holds: 0

This paper presents a context dependent valuation (CDV) model of decision making under risk where the valuation of a gamble depends not only on its own probability-outcome structure but also on the other gambles that it is compared with. This descriptive model draws motivation from the range-frequency theory (Parducci 1965, 1968) which states that the subjective value given to a stimulus depends on its position as well as its rank in the set of observed stimuli. The CDV model is based on the value maximization paradigm and is shown to explain and predict (1) violation of non-transparent stochastic dominance (while retaining transparent stochastic dominance), (2) procedure invariance in the form of a wide variety of preference reversals and elicitation biases, (3) description invariance in the form of juxtaposition, event splitting and framing effects, and (4) classic phenomena such as the four-fold pattern of risk attitudes, violation of monotonicity, the common consequence effect and the common ratio effect.

Digitized

There are no comments for this item.

Log in to your account to post a comment.
Koha 18.11 - INSEAD Catalogue
Home | Contact Us | What's Koha?