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  1. Introduction to the Special Issue in Honor of Peter Wakker.Mohammed Abdellaoui, Han Bleichrodt, Enrico Diecidue & Horst Zank - 2022 - Theory and Decision 92 (3-4):433-444.
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  2. A Comment on the Axiomatics of the Maxmin Expected Utility Model.Shiri Alon - 2022 - Theory and Decision 92 (3-4):445-453.
    Maxmin Expected Utility was first axiomatized by Gilboa and Schmeidler in an Anscombe–Aumann setup Anscombe and Aumann which includes exogenous probabilities. The model was later axiomatized in a purely subjective setup, where no exogenous probabilities are assumed. The purpose of this note is to show that in all these axiomatizations, the only assumptions that are needed are the basic ones that are used to extract a cardinal utility function, together with the two typical Maxmin assumptions, Uncertainty Aversion and Certainty Independence, (...)
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  3.  1
    A Framework for the Analysis of Self-Confirming Policies.P. Battigalli, S. Cerreia-Vioglio, F. Maccheroni, M. Marinacci & T. Sargent - 2022 - Theory and Decision 92 (3-4):455-512.
    This paper provides a general framework for analyzing self-confirming policies. We study self-confirming equilibria in recurrent decision problems with incomplete information about the true stochastic model. We characterize stationary monetary policies in a linear-quadratic setting.
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  4.  1
    A Gene–Brain–Behavior Basis for Familiarity Bias in Source Preference.Robin Chark, Songfa Zhong, Shui Ying Tsang, Chiea Chuen Khor, Richard P. Ebstein, Hong Xue & Soo Hong Chew - 2022 - Theory and Decision 92 (3-4):531-567.
    Source preference in which equally distributed risks may be valued differently has been receiving increasing attention. Using subjects recruited in Berkeley, Fox and Tversky demonstrate a familiarity bias in source preference—betting on a less than even-chance event based on San Francisco temperature is valued more than betting on a better than even-chance event based on Istanbul temperature. Neophobia is associated with the amygdala which is GABA-rich and is known to be modulated by benzodiazepines as anxiolytic agents that enhance the activity (...)
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  5.  1
    Optimality of Deductible: A Characterization, with Application to Yaari’s Dual Theory.Alain Chateauneuf, Michèle Cohen & Mina Mostoufi - 2022 - Theory and Decision 92 (3-4):569-580.
    The main purpose of this paper is to show that left-monotone risk aversion, a meaningful refinement of strong risk aversion, characterizes decision makers for whom deductible insurance is optimal. A second goal is to prove that the deductible’s computation is particularly tractable in the case of Yaari’s decision makers.
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  6.  2
    Correction To: Optimality of Deductible: A Characterization, with Application to Yaari’s Dual Theory.Alain Chateauneuf, Michèle Cohen & Mina Mostoufi - 2022 - Theory and Decision 92 (3-4):581-581.
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  7. The Impact of Experience on Decisions Based on Pre-Choice Samples and the Face-or-Cue Hypothesis.Ido Erev, Ofir Yakobi, Nathaniel J. S. Ashby & Nick Chater - 2022 - Theory and Decision 92 (3-4):583-598.
    The growing literature on how people learn to make decisions based on experience focuses on two types of paradigms. In one paradigm, people are faced with a choice, and must retrospectively consult past experience of similar choices to decide what to do. In the other paradigm, people are faced with a choice, and then have the opportunity prospectively to gather new experiences that might help them make that choice. The current paper examines the joint impact of both retrospective and prospective (...)
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  8.  2
    Composition Rules in Original and Cumulative Prospect Theory.Richard Gonzalez & George Wu - 2022 - Theory and Decision 92 (3-4):647-675.
    Original and cumulative prospect theory differ in the composition rule used to combine the probability weighting function and the value function. We test the predictive power of these composition rules by performing a novel out-of-sample prediction test. We apply estimates of prospect theory’s weighting and value function obtained from two-outcome cash equivalents, a domain where original and cumulative prospect theory coincide, to three-outcome cash equivalents, a domain where the composition rules of the two theories differ. Although both forms of prospect (...)
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  9.  1
    On the Cardinal Utility Equivalence of Biseparable Preferences.Fabio Maccheroni, Massimo Marinacci & Jingni Yang - 2022 - Theory and Decision 92 (3-4):689-701.
    We establish a simple condition, based on the willingness to bet on events, under which two biseparable preferences have cardinally equivalent utilities.
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  10. Production Under Uncertainty and Choice Under Uncertainty in the Emergence of Generalized Expected Utility Theory.John Quiggin - 2022 - Theory and Decision 92 (3-4):717-729.
    Interest in the foundations of the theory of choice under uncertainty was stimulated by applications of expected utility theory such as the Sandmo model of production under uncertainty. The development of generalized expected utility models raised the question of whether such models could be used in the analysis of applied problems such as those involving production under uncertainty. Finally, the revival of the state-contingent approach led to the recognition of a fundamental duality between choice problems and production problems.
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  11.  2
    How We Decide Shapes What We Choose: Decision Modes Track Consumer Decisions That Help Decarbonize Electricity Generation.Crystal Reeck, Karoline Gamma & Elke U. Weber - 2022 - Theory and Decision 92 (3-4):731-758.
    With concerns regarding climate change rising, companies and policy makers seek to understand the precursors to environmentally-friendly consumer choice. Decision modes are the qualitatively different psychological processes employed to arrive at decisions. Across six studies, the present project establishes which decision modes are employed by consumers to decide between electricity plans that differ in environmental impact, and how employed decision modes affect those choices. We demonstrate that consumers are most likely to use Calculation Modes when facing such choices. Importantly, we (...)
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  12. Debiasing or Regularisation? Two Interpretations of the Concept of ‘True Preference’ in Behavioural Economics.Robert Sugden - 2022 - Theory and Decision 92 (3-4):765-784.
    I reconsider Bleichrodt, Pinto Prades and Wakker’s 2001 paper about eliciting utility measures from stated preference surveys. That paper pioneers a method that is now widely used in behavioural economics to correct individuals’ ‘biases’ and to recover their ‘true preferences’. However, BPW propose this method as way of dealing with inconsistent responses to stated preference surveys, in contrast to more recent applications which aim to help individuals to avoid supposed mistakes in their private choices. I argue that the concepts of (...)
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  13.  3
    Strategic Manipulation in Judgment Aggregation Under Higher-Level Reasoning.Zoi Terzopoulou & Ulle Endriss - 2022 - Theory and Decision 92 (2):363-385.
    We analyse the incentives of individuals to misrepresent their truthful judgments when engaged in collective decision-making. Our focus is on scenarios in which individuals reason about the incentives of others before choosing which judgments to report themselves. To this end, we introduce a formal model of strategic behaviour in logic-based judgment aggregation that accounts for such higher-level reasoning as well as the fact that individuals may only have partial information about the truthful judgments and preferences of their peers. We find (...)
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  14.  5
    A Tale of Two Cities: An Experiment on Inequality and Preferences.Maria Bigoni, Stefania Bortolotti & Veronica Rattini - 2022 - Theory and Decision 92 (1):189-222.
    The existence of a strong link between socio-economic background and individual preferences has been documented among both children and grown-ups. Here, we study whether such a correlation persists even in a highly homogeneous population of young adults: university students. Our findings indicate that participants living in an area characterized by a high socio-economic environment tend to trust more and are more inclined to reciprocate higher levels of trust, as compared to those coming from less wealthy neighborhoods. This behavioral difference is, (...)
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  15.  2
    Scarcity and Consumers’ Credit Choices.Marieke Bos, Chloé Le Coq & Peter van Santen - 2022 - Theory and Decision 92 (1):105-139.
    We study the effect of scarcity on decision making by low income Swedes. We exploit the random assignment of welfare payments to study their borrowing decisions within the pawn and mainstream credit market. We document that higher educated borrowers borrow less frequently and choose lower loan to value ratios when their budget constraints are exogenously tighter. In contrast, low-educated borrowers do not respond to temporary elevated levels of scarcity. This lack of response translates into a significantly higher probability to default (...)
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  16.  2
    Poverty and Economic Decision Making: A Review of Scarcity Theory. [REVIEW]Ernst-Jan de Bruijn & Gerrit Antonides - 2022 - Theory and Decision 92 (1):5-37.
    Poverty is associated with a wide range of counterproductive economic behaviors. Scarcity theory proposes that poverty itself induces a scarcity mindset, which subsequently forces the poor into suboptimal decisions and behaviors. The purpose of our work is to provide an integrated, up-to-date, critical review of this theory. To this end, we reviewed the empirical evidence for three fundamental propositions: Poverty leads to attentional focus and neglect causing overborrowing, poverty induces trade-off thinking resulting in more consistent consumption decisions, and poverty reduces (...)
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  17.  3
    Groups Discipline Resource Use Under Scarcity.Florian Diekert & Kjell Arne Brekke - 2022 - Theory and Decision 92 (1):75-103.
    Scarcity sharpens the conflict between short term gains and long term sustainability. Psychological research documents that decision makers focus on immediate needs under scarcity and use available resources more effectively. However, decision makers also borrow too much from future resources and overall performance decreases as a consequence. Using an online experiment, we study how scarcity affects borrowing decisions in groups. We first document that scarcity affects groups in a similar way as individuals. Then, we go on to show that the (...)
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  18. Endowment Effects in the Risky Investment Game?Stein T. Holden & Mesfin Tilahun - 2022 - Theory and Decision 92 (1):259-274.
    The risky investment game of Gneezy and Potters :631–645, 1997) has been proposed as a simple tool to measure risk aversion in applied settings, especially attractive in settings where participants may have limited education. However, this game can produce a significant endowment effect, so that analysis of the behavior in this game should not be done in the Expected Utility Theory framework. The paper illustrates this point, by showing that risk tolerance can be much higher when the initial endowment concerns (...)
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  19.  1
    Probability Weighting for Losses and for Gains Among Smallholder Farmers in Uganda.Arjan Verschoor & Ben D’Exelle - 2022 - Theory and Decision 92 (1):223-258.
    Probability weighting is a marked feature of decision-making under risk. For poor people in rural areas of developing countries, how probabilities are evaluated matters for livelihoods decisions, especially the probabilities associated with losses. Previous studies of risky choice among poor people in developing countries seldom consider losses and do not offer a refined tracking of the probability-weighting function. We investigate probability weighting among smallholder farmers in Uganda, separately for losses and for gains, using a method that allows refined tracking of (...)
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