Expected utility theory with imprecise probability perception: explaining preference reversals

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Expected utility theory with imprecise probability perception : explaining preference reversals. / Bayrak, Oben; Hey, John Denis.

In: Applied Economics Letters, Vol. 24, No. 13, 2017, p. 906-910.

Research output: Contribution to journalArticlepeer-review

Harvard

Bayrak, O & Hey, JD 2017, 'Expected utility theory with imprecise probability perception: explaining preference reversals', Applied Economics Letters, vol. 24, no. 13, pp. 906-910. https://doi.org/10.1080/13504851.2016.1240332

APA

Bayrak, O., & Hey, J. D. (2017). Expected utility theory with imprecise probability perception: explaining preference reversals. Applied Economics Letters, 24(13), 906-910. https://doi.org/10.1080/13504851.2016.1240332

Vancouver

Bayrak O, Hey JD. Expected utility theory with imprecise probability perception: explaining preference reversals. Applied Economics Letters. 2017;24(13):906-910. https://doi.org/10.1080/13504851.2016.1240332

Author

Bayrak, Oben ; Hey, John Denis. / Expected utility theory with imprecise probability perception : explaining preference reversals. In: Applied Economics Letters. 2017 ; Vol. 24, No. 13. pp. 906-910.

Bibtex - Download

@article{d7938ed1f17444358a37caf33da8ec5b,
title = "Expected utility theory with imprecise probability perception: explaining preference reversals",
abstract = "This article presents a new model for decision-making under risk, which provides an explanation for empirically-observed preference reversals. Central to the theory is the incorporation of probability perception imprecision, which arises because of individuals{\textquoteright} vague understanding of numerical probabilities. We combine this concept with the use of the Alpha EU model and construct a simple model which helps us to understand anomalies, such as preference reversals and valuation gaps, discovered in the experimental economics literature, that standard models cannot explain.",
keywords = "alpha EU model, anomalies in expected utility theory, decision under risk, imprecise probability perceptions, preference reversals, valuation gaps",
author = "Oben Bayrak and Hey, {John Denis}",
note = "{\textcopyright} 2016, Informa UK Limited, trading as Taylor & Francis Group. This is an author-produced version of the published paper. Uploaded in accordance with the publisher{\textquoteright}s self-archiving policy. Further copying may not be permitted; contact the publisher for details.",
year = "2017",
doi = "10.1080/13504851.2016.1240332",
language = "English",
volume = "24",
pages = "906--910",
journal = "Applied Economics Letters",
issn = "1350-4851",
publisher = "Routledge",
number = "13",

}

RIS (suitable for import to EndNote) - Download

TY - JOUR

T1 - Expected utility theory with imprecise probability perception

T2 - explaining preference reversals

AU - Bayrak, Oben

AU - Hey, John Denis

N1 - © 2016, Informa UK Limited, trading as Taylor & Francis Group. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. Further copying may not be permitted; contact the publisher for details.

PY - 2017

Y1 - 2017

N2 - This article presents a new model for decision-making under risk, which provides an explanation for empirically-observed preference reversals. Central to the theory is the incorporation of probability perception imprecision, which arises because of individuals’ vague understanding of numerical probabilities. We combine this concept with the use of the Alpha EU model and construct a simple model which helps us to understand anomalies, such as preference reversals and valuation gaps, discovered in the experimental economics literature, that standard models cannot explain.

AB - This article presents a new model for decision-making under risk, which provides an explanation for empirically-observed preference reversals. Central to the theory is the incorporation of probability perception imprecision, which arises because of individuals’ vague understanding of numerical probabilities. We combine this concept with the use of the Alpha EU model and construct a simple model which helps us to understand anomalies, such as preference reversals and valuation gaps, discovered in the experimental economics literature, that standard models cannot explain.

KW - alpha EU model

KW - anomalies in expected utility theory

KW - decision under risk

KW - imprecise probability perceptions

KW - preference reversals

KW - valuation gaps

U2 - 10.1080/13504851.2016.1240332

DO - 10.1080/13504851.2016.1240332

M3 - Article

VL - 24

SP - 906

EP - 910

JO - Applied Economics Letters

JF - Applied Economics Letters

SN - 1350-4851

IS - 13

ER -