Experimental investigations of errors in decision-making under risk

J D  HEY

Experimental investigations of errors in decision-making under risk

Economics

Research output: Contribution to journal › Article › peer-review

Abstract

Many, if not all, of the recent theories of decision making under risk, that have been developed in the light of experimentally observed violations of Expected Utility theory, are essentially deterministic in nature, yet it is clear that actual decision making contains a random or error component. This paper surveys the assumptions that have been employed in previous analyses of such experimental data, and tries to find better explanations (both from an economic and an econometrics point of view), of such errors. Hopefully, such work will lead to a unified theory, in which the stochastic component is an integral part.

Original language	English
Pages (from-to)	633-640
Number of pages	8
Journal	European Economic Review
Volume	39
Issue number	3-4
Publication status	Published - Apr 1995

Keywords

DECISION MAKING
RISK
ERRORS
EXPERIMENTS

Cite this

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title = "Experimental investigations of errors in decision-making under risk",

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AB - Many, if not all, of the recent theories of decision making under risk, that have been developed in the light of experimentally observed violations of Expected Utility theory, are essentially deterministic in nature, yet it is clear that actual decision making contains a random or error component. This paper surveys the assumptions that have been employed in previous analyses of such experimental data, and tries to find better explanations (both from an economic and an econometrics point of view), of such errors. Hopefully, such work will lead to a unified theory, in which the stochastic component is an integral part.

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KW - EXPERIMENTS

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