Journal article
A model of probabilistic choice satisfying first-order stochastic dominance
Management Science, Vol.57(3), pp.542-548
2011
Abstract
This paper presents a new model of probabilistic binary choice under risk. In this model, a decision maker always satisfies first-order stochastic dominance. If neither lottery stochastically dominates the other alternative, a decision maker chooses in a probabilistic manner. The proposed model is derived from four standard axioms (completeness, weak stochastic transitivity, continuity, and common consequence independence) and two relatively new axioms. The proposed model provides a better fit to experimental data than do existing models. The baseline model can be extended to other domains such as modeling variable consumer demand.
Details
- Title
- A model of probabilistic choice satisfying first-order stochastic dominance
- Authors/Creators
- P.R. Blavatskyy (Author/Creator)
- Publication Details
- Management Science, Vol.57(3), pp.542-548
- Publisher
- Institute for Operations Research and Management Sciences
- Identifiers
- 991005543051007891
- Copyright
- © 2011 INFORMS.
- Murdoch Affiliation
- Murdoch University
- Language
- English
- Resource Type
- Journal article
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- Citation topics
- 6 Social Sciences
- 6.122 Economic Theory
- 6.122.1287 Risk Preferences
- Web Of Science research areas
- Management
- Operations Research & Management Science
- ESI research areas
- Economics & Business