Showing papers on "Certainty effect published in 2007"
1 Aug 2007
TL;DR: According to the prospect theory, there are some bounded rationality such as frame effect, reference point and certainty effect in individual decision-making under conditions of uncertainty as discussed by the authors, and the difference which is from attitudes to risk indicates the decision making of individual is not only prompted by expected utility, but also influenced by many kinds of psychological factors.
Abstract: Prospect theory has challenged the decision-making principle of expected utility maximization which based on rationality .According to the prospect theory, there are some bounded rationality such as frame effect, reference point and certainty effect in individual decision making under conditions of uncertainty. There are 120 undergraduates of University of Engineering Heibei which are made the subjects of the laboratory experiment, the experiment showing that the attitudes to risk are different under uncertainty. The difference which is from attitudes to risk indicates the decision making of individual is not only prompted by expected utility, but also influenced by many kinds of psychological factors. The result implies that there are some bounded rationality psychological characteristics, such as the frame effect, reference point and certainty effect.
3 citations
Posted Content•
TL;DR: In this article, the authors present the results of two experiments testing reaction to risk and uncertainty of a sample of 66 Italian university students, and show that the subjects' behaviour is consistent with expected utility theory as regards risk, but not under uncertainty.
Abstract: This paper presents the results of two experiments testing reaction to risk and uncertainty of a sample of 66 Italian university students. Risky prospects were based on games of chance, while uncertain lotteries were based on the forthcoming results of either the May 2001 Italian general political election or the June 2004 election for the European Parliament. We computed decision weights for risk and uncertainty; we also collected data as regards the subjects’ degree of belief, expressed by probability judgements, for the same uncertain events. Our results show that the subjects’ behaviour is consistent with expected utility theory as regards risk, but not under uncertainty. In particular, our subjects show a strong superadditivity in the decision weights and the possibility effect (lower subadditivity) is stronger than the certainty effect (upper subadditivity). There is also evidence that emotions, actual competence and confidence positively affect the possibility effect, whereas they do not have any influence on the certainty effect, reinforcing the lack of symmetry between the two effects
1 citations
Journal Article•
TL;DR: According to the prospect theory, there are some irrational psychological characteristics, such as the frame effect, reference point and certainty effect in individual decision making under uncertainty, and the difference indicates the decision making of individual is not only prompted by expected utility, but also influenced by some psychological factors.
Abstract: Prospect theory has challenged the decision-making principle of expected utility maximization which based on rationality.According to the prospect theory,there are some irrational such as frame effect,reference point and certainty effect in individual decision making under uncertainty.120 undergraduates are made the subjects of the laboratory experiment,the experiment showing that the attitudes to risk are different under uncertainty.The difference indicates the decision making of individual is not only prompted by expected utility,but also influenced by some psychological factors.There are some irrational psychological characteristics,such as the frame effect,reference point and certainty effect.
1 citations