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A closer look at the Russian roulette problem: A re-examination of the nonlinearity of the prospect theory's decision weight pi
Li, Li-Bo2; He, Shu-Hong3; Li, Shu1; Xu, Jie-Hong1; Rao, Li-Lin1; S. Li
2009-03-01
Source PublicationINTERNATIONAL JOURNAL OF APPROXIMATE REASONING
ISSN0888-613X
SubtypeArticle
Volume50Issue:3Pages:515-520
AbstractUtilizing the Russian roulette problem as an exemplar, Kahneman and Tversky (1979) developed a weighting function pi to explain that the Allais Paradox arises because people behave so as to maximize overall value rather than expected utility (EU). Following the way that "overweighting of small probabilities" originated from the Russian roulette problem, this research measured individuals' willingness to pay (WTP) as well as their happiness for a reduction of the probability of death, and examined whether the observed figures were compatible with the nonlinearity of the weighting function. Data analysis revealed that the nonlinear properties estimated by straight measures differed from those derived from preferential choices I D. Kahneman, A. Tversky, Prospect theory: an analysis of decision under risk, Econometrica 47 (1979) 263-291] and formulated by [A. Tversky, D. Kahneman, Advances in prospect theory: Cumulative representation of uncertainty, journal of Risk and Uncertainty 5 (1992) 297-323]. The controversies and questions to the proposed properties of the decision weight were discussed. An attempt was made to draw the research attention from which function was being maximized to whether people behave as if they were trying to maximize some generalized expectation.; Utilizing the Russian roulette problem as an exemplar, Kahneman and Tversky (1979) developed a weighting function pi to explain that the Allais Paradox arises because people behave so as to maximize overall value rather than expected utility (EU). Following the way that "overweighting of small probabilities" originated from the Russian roulette problem, this research measured individuals' willingness to pay (WTP) as well as their happiness for a reduction of the probability of death, and examined whether the observed figures were compatible with the nonlinearity of the weighting function. Data analysis revealed that the nonlinear properties estimated by straight measures differed from those derived from preferential choices I D. Kahneman, A. Tversky, Prospect theory: an analysis of decision under risk, Econometrica 47 (1979) 263-291] and formulated by [A. Tversky, D. Kahneman, Advances in prospect theory: Cumulative representation of uncertainty, journal of Risk and Uncertainty 5 (1992) 297-323]. The controversies and questions to the proposed properties of the decision weight were discussed. An attempt was made to draw the research attention from which function was being maximized to whether people behave as if they were trying to maximize some generalized expectation. (C) 2008 Elsevier Inc. All rights reserved.
KeywordRussian roulette problem 1979 version of prospect theory 1992 version of prospect theory Decision weight pi Decision weight w
Subject Area社会心理学
Indexed BySCI ; SSCI
Language英语
WOS IDWOS:000264713200010
Citation statistics
Document Type期刊论文
Identifierhttp://ir.psych.ac.cn/handle/311026/5115
Collection中国科学院心理研究所回溯数据库(1956-2010)
Corresponding AuthorS. Li
Affiliation1.Chinese Acad Sci, Inst Psychol, Ctr Social & Econ Behav, Beijing 100101, Peoples R China
2.Univ New S Wales, Sch Math, Sydney, NSW 2052, Australia
3.Yunnan Univ, Dept Math, Kunming, Peoples R China
Recommended Citation
GB/T 7714
Li, Li-Bo,He, Shu-Hong,Li, Shu,et al. A closer look at the Russian roulette problem: A re-examination of the nonlinearity of the prospect theory's decision weight pi[J]. INTERNATIONAL JOURNAL OF APPROXIMATE REASONING,2009,50(3):515-520.
APA Li, Li-Bo,He, Shu-Hong,Li, Shu,Xu, Jie-Hong,Rao, Li-Lin,&S. Li.(2009).A closer look at the Russian roulette problem: A re-examination of the nonlinearity of the prospect theory's decision weight pi.INTERNATIONAL JOURNAL OF APPROXIMATE REASONING,50(3),515-520.
MLA Li, Li-Bo,et al."A closer look at the Russian roulette problem: A re-examination of the nonlinearity of the prospect theory's decision weight pi".INTERNATIONAL JOURNAL OF APPROXIMATE REASONING 50.3(2009):515-520.
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