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- Title
RANK-DEPENDENT PROBABILITIES.
- Authors
Karni, Edi; Safra, Zvi
- Abstract
Expected utility with rank-dependent probabilities, (henceforth EURDP), is a theory of decision making under risk in which individuals' preferences over risky prospects are represented by the mathematical expectation of a utility function with respect to a transformation of the outcomes probabilities. Due originally to Quiggin (1982) and Yaari (1987), these models were generalised by Chew (1984) and Segal (1989), respectively. In this paper we present an hypothesis concerning the nature of the transformation of the probabilities consistent with the 'preference reversals' phenomenon, and explore some of its testable implications.
- Subjects
DECISION making; INSURANCE; GAMBLING; LOTTERIES; PRIZES (Contests &; competitions)
- Publication
Economic Journal, 1990, Vol 100, Issue 401, p487
- ISSN
0013-0133
- Publication type
Article
- DOI
10.2307/2234135