ISSN:
1573-7187
Keywords:
decision theory
;
risk
;
expected utility
;
security level
;
risk aversion
Source:
Springer Online Journal Archives 1860-2000
Topics:
Sociology
,
Economics
Notes:
Abstract The particular attention paid by decision makers to the security level ensured by each decision under risk, which is responsible for the certainty effect, can be taken into account by weakening the independence and continuity axioms of expected utility theory. In the resulting model, preferences depend on: (i) the security level, (ii) the expected utility, offered by each decision. Choices are partially determined by security level comparison and completed by the maximization of a function, which express the existing tradeoffs between expected utility and security level, and is, at a given security level, an affine function of the expected utility. In the model, risk neutrality at a given security level implies risk aversion.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF00132460
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