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Boundedly rational expected utility theory
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Navarro-Martinez, Daniel, Loomes, Graham, Isoni, Andrea, Butler, David and Alaoui, Larbi (2018) Boundedly rational expected utility theory. Journal of Risk and Uncertainty, 57 (3). pp. 199-223. doi:10.1007/s11166-018-9293-3 ISSN 0895-5646.
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Official URL: https://doi.org/10.1007/s11166-018-9293-3
Abstract
We build a satisficing model of choice under risk which embeds Expected Utility Theory (EUT) into a boundedly rational deliberation process. The decision maker accumulates evidence for and against alternative options by repeatedly sampling from her underlying set of EU preferences until the evidence favouring one option satisfies her desired level of confidence. Despite its EUT core, the model produces patterns of behaviour that violate standard EUT axioms, while at the same time capturing systematic relationships between choice probabilities, response times and confidence judgments, which are beyond the scope of theories that do not take deliberation into account.
Item Type: | Journal Article | |||||||||||||||
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Subjects: | H Social Sciences > HB Economic Theory | |||||||||||||||
Divisions: | Faculty of Social Sciences > Warwick Business School > Behavioural Science Faculty of Social Sciences > Warwick Business School |
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Library of Congress Subject Headings (LCSH): | Risk, Uncertainty, Decision making -- Mathematical models | |||||||||||||||
Journal or Publication Title: | Journal of Risk and Uncertainty | |||||||||||||||
Publisher: | Springer New York LLC | |||||||||||||||
ISSN: | 0895-5646 | |||||||||||||||
Official Date: | 28 December 2018 | |||||||||||||||
Dates: |
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Volume: | 57 | |||||||||||||||
Number: | 3 | |||||||||||||||
Page Range: | pp. 199-223 | |||||||||||||||
DOI: | 10.1007/s11166-018-9293-3 | |||||||||||||||
Status: | Peer Reviewed | |||||||||||||||
Publication Status: | Published | |||||||||||||||
Access rights to Published version: | Open Access (Creative Commons) | |||||||||||||||
Date of first compliant deposit: | 25 September 2018 | |||||||||||||||
Date of first compliant Open Access: | 17 January 2019 | |||||||||||||||
RIOXX Funder/Project Grant: |
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