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Security and Potential Level Preferences with Thresholds

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  • Alexander Zimper
  • Ulrich Schmidt

Abstract

The security level models of Gilboa (1988) and of Jaffray (1988) as well as the security and potential level model of Cohen (1992) and Essid (1997) successfully accommodate classical Allais paradoxes while they offer an interesting explanation for their occurrence. However, experimental data suggest a systematic violation of these models when lotteries with low probabilities […]

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  • Alexander Zimper & Ulrich Schmidt, 2007. "Security and Potential Level Preferences with Thresholds," Working Papers 047, Economic Research Southern Africa.
    • Handle: RePEc:rza:wpaper:047
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    References listed on IDEAS

    as
    1. Itzhak Gilboa, 1988. "A Combination of Expected Utility and Maxmin Decision Criteria," Post-Print hal-00753244, HAL.
    2. Chateauneuf, Alain & Eichberger, Jurgen & Grant, Simon, 2007. "Choice under uncertainty with the best and worst in mind: Neo-additive capacities," Journal of Economic Theory, Elsevier, vol. 137(1), pages 538-567, November.
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    7. Chris Starmer, 2000. "Developments in Non-expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 332-382, June.
    8. Essid, Samir, 1997. "Choice under risk with certainty and potential effects: A general axiomatic model," Mathematical Social Sciences, Elsevier, vol. 34(3), pages 223-247, October.
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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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