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Preferences UnderUncertainty and the Deficiencies of the Expected Utility Model

Author

Listed:
  • Murat Tasdemir

    (Eskisehir Osmangazi University)

Abstract

In economics, the prevailing framework to explain preferences under uncerta- inty is the Expected Utility theory. Despite its widespread use, the Expected Utility theory is not free from problems. Experimental and empirical works shows that, in real life, the choices of individuals among risky alternatives conflict with the axioms of the Expected Utility theory. This study, in the light of experimental studies, investigates the problems with the Expected Utility theory regarding the individuals’preferences under risk.

Suggested Citation

  • Murat Tasdemir, 2007. "Preferences UnderUncertainty and the Deficiencies of the Expected Utility Model," Anadolu University Journal of Social Sciences, Anadolu University, vol. 7(1), pages 307-318, December.
    • Handle: RePEc:and:journl:v:7:y:2007:i:1:p:307-318
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    File URL: http://www.anadolu.edu.tr/arastirma/hakemli_dergiler/sosyal_bilimler/pdf/2007-1/sos_bil_16.pdf
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    More about this item

    Keywords

    Preferences; Uncertainty; Risk; Expected Utility; Utility Function.;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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