IDEAS home Printed from https://ideas.repec.org/a/kap/jrisku/v11y1995i1p17-49.html
   My bibliography  Save this article

A Theory of Coarse Utility

Author

Listed:
  • Liu, Liping
  • Shenoy, Prakash P

Abstract

This article presents a descriptive theory for complex choice problems. In line with the bounded rationality assumption, we hypothesize that decision makers modify a complex choice into some coarse approximations, each of which is a binary lottery. We define the value of a best coarse approximation to be the utility of the choice. Using this paradigm, we axiomatize and justify a new utility function called the "coarse utility function." We show that the coarse utility function approximates the rank- and sign-dependent utility function. It satisfies dominance but admits violations of independence. It reduces judgmental load and allows flexible judgmental information. It accommodates phenomena associated with probability distortions and provides a better resolution to the St. Petersburg paradox than the expected and rank-dependent theories. Copyright 1995 by Kluwer Academic Publishers

Suggested Citation

  • Liu, Liping & Shenoy, Prakash P, 1995. "A Theory of Coarse Utility," Journal of Risk and Uncertainty, Springer, vol. 11(1), pages 17-49, July.
    • Handle: RePEc:kap:jrisku:v:11:y:1995:i:1:p:17-49
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liu, Liping, 2004. "A new foundation for the mean-variance analysis," European Journal of Operational Research, Elsevier, vol. 158(1), pages 229-242, October.
    2. Liping Liu, 2004. "A Note on Luce-Fishburn Axiomatization of Rank-Dependent Utility," Journal of Risk and Uncertainty, Springer, vol. 28(1), pages 55-71, January.
    3. Liu, Liping, 1999. "Approximate portfolio analysis," European Journal of Operational Research, Elsevier, vol. 119(1), pages 35-49, November.
    4. Rajendra P. Srivastava & Liping Liu, 2003. "Applications of Belief Functions in Business Decisions: A Review," Information Systems Frontiers, Springer, vol. 5(4), pages 359-378, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jrisku:v:11:y:1995:i:1:p:17-49. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.