Empirical rules of thumb for choice under uncertainty

Empirical rules of thumb for choice under uncertainty

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Article ID: iaor20118028
Volume: 71
Issue: 3
Start Page Number: 431
End Page Number: 438
Publication Date: Sep 2011
Journal: Theory and Decision
Authors:
Keywords: heuristics
Abstract:

A substantial body of empirical evidence shows that individuals overweight extreme events and act in conflict with the expected utility theory. These findings were the primary motivation behind the development of a rank‐dependent utility theory for choice under uncertainty. The purpose of this paper is to demonstrate that some simple empirical rules of thumb for choice under uncertainty are consistent with the rank‐dependent utility theory.

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