Choice under Uncertainty and Bounded Rationality

Arbeitspapier

This paper develops a theory for probabilistic models for risky choices that can be viewed as an extension of the expected utility theory to account for bounded rationality. One probabilistic version of the Archimedean Axiom and two versions of the Independence Axiom are proposed. In addition, additional axioms are proposed of which one is Luce's Independence from Irrelevant Alternatives. It is demonstrated that different combinations of the axioms yield different characterizations of the probabilities for choosing the respective risky prospects

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Papers ; No. 409

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities ; Consumer Economics: Theory ; Criteria for Decision-Making under Risk and Uncertainty
• Subject: Random tastes ; bounded rationality ; independence from irrelevant alternatives ; choice among lotteries ; probabilistic choice for uncertain outcomes.

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dagsvik, John K.
• Event: Veröffentlichung
• (who): Statistics Norway, Research Department
• (where): Oslo
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/192391
• Last update: 10.03.2025, 11:42 AM CET