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  1. Independent Collective Identity Functions as Voting Rules.José Carlos R. Alcantud & Annick Laruelle - 2020 - Theory and Decision 89 (1):107-119.
    In this paper we study collective identity functions that deal with formation of clubs. Usually the choice offered to individuals is to cast a vote in favor of qualification or not, and the final outcome is qualification or non-qualification. In this context we show that independent collective identity functions are naturally characterized by voting rules, and in particular, consent rules can be represented by one single collection of weighted majorities. In addition, we consider the extended model where voters are allowed (...)
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  2. Quasi-Stationary Social Welfare Functions.Susumu Cato - 2020 - Theory and Decision 89 (1):85-106.
    This paper examines collective decision-making with an infinite-time horizon setting. First, we establish a result on the collection of decisive sets: if there are at least four alternatives and Arrow’s axioms are satisfied on the selfish domain, then the collection of decisive sets forms an ultrafilter. Second, we impose generalized versions of stationarity axiom for social preferences, which are substantially weaker than the standard version. We show that if any of our generalized versions are satisfied in addition to Arrow’s axioms, (...)
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  3. Some Conditions for the Equivalence Between Risk Aversion, Prudence and Temperance.Marzia De Donno & Mario Menegatti - 2020 - Theory and Decision 89 (1):39-60.
    We study relationships between different aspects of risk preferences. We show that, under the assumptions of non-satiation and bounded marginal utility, some additional conditions on the asymptotic behaviour of the indices of relative prudence and relative temperance ensure that risk aversion, prudence and temperance are equivalent. Similar conclusions are derived for higher-degree risk aversion. Moreover, some links between indices of relative risk aversion of different degrees are derived. The implications of these results for several economic problems which involve risk changes (...)
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  4. Need, Frames, and Time Constraints in Risky Decision-Making.Adele Diederich, Marc Wyszynski & Stefan Traub - 2020 - Theory and Decision 89 (1):1-37.
    In two experiments, participants had to choose between a sure and a risky option. The sure option was presented either in a gain or a loss frame. Need was defined as a minimum score the participants had to reach. Moreover, choices were made under two different time constraints and with three different levels of induced need to be reached within a fixed number of trials. The two experiments differed with respect to the specific amounts to win and the need levels. (...)
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  5.  2
    Decision Making Under Uncertainty: The Relation Between Economic Preferences and Psychological Personality Traits.David Schröder & Gail Gilboa Freedman - 2020 - Theory and Decision 89 (1):61-83.
    Both economists and psychologists are interested in understanding decision making under uncertainty. Yet, they rely on different concepts to analyse human behaviour: economists use economic preference parameters rooted in utility theory, while psychologists use personality traits to describe responses to uncertain situations. Using a large sample of university students, this study examines and contrasts five economic preference parameters and six psychological personality traits that are commonly used to study individuals’ attitudes towards uncertainty. A novelty of this paper is including both (...)
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  6.  3
    On the Existence and Stability of Equilibria in N-Firm Cournot–Bertrand Oligopolies.Anne-Christine Barthel & Eric Hoffmann - 2020 - Theory and Decision 88 (4):471-491.
    This paper takes a novel approach to studying the existence and stability of Nash equilibria in N-firm Cournot–Bertrand oligopolies. First, we show that such games can be monotonically embedded into a game of strategic heterogeneity, so that each firm best responds to the choices of all other firms in a monotonic way. We then show that this monotonicity can be exploited to derive conditions which guarantee the existence of a unique, dominance solvable Nash equilibrium which is stable under all adaptive (...)
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  7.  4
    The Two Faces of Independence: Betweenness and Homotheticity.Daniel R. Burghart - 2020 - Theory and Decision 88 (4):567-593.
    This paper shows that expected utility belongs to the intersection of models satisfying betweenness and a homotheticity condition for risky choice. Betweenness models can accommodate variable risk attitudes, originally highlighted by the Allais paradox, by restricting indifference curves to be linear while allowing non-parallelism. Homotheticity, in contrast, restricts indifference curves to be parallel while permitting non-linearities, such as those highlighted by inverse-S probability weighting. Data from an experiment indicate that approximately 2/3s of participants satisfied homotheticity. Of this group, about half (...)
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  8.  3
    On Temperance and Risk Spreading.Christophe Courbage & Béatrice Rey - 2020 - Theory and Decision 88 (4):527-539.
    This paper shows that temperance is the highest order risk preference condition for which spreading N independent and unfair risks provides the highest level of welfare than any other possible allocations of risks. These results are also interpreted through the concept of N-superadditivity of the utility premium. This paper provides a novel application of temperance, not in terms of two risks as it is common, but in terms of N risks.
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  9.  34
    Supergrading: How Diverse Standards Can Improve Collective Performance in Ranking Tasks.Michael Morreau - 2020 - Theory and Decision 88 (4):541-565.
    The method of supergrading is introduced for deriving a ranking of items from scores or grades awarded by several people. Individual inputs may come in different languages of grades. Diversity in grading standards is an advantage, enabling rankings derived by this method to separate more items from one another. A framework is introduced for studying grading on the basis of observations. Measures of accuracy, reliability and discrimination are developed within this framework. Ability in grading is characterized for individuals and groups (...)
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  10.  8
    Resolving Zeckhauser’s Paradox.Yudi Pawitan & Gabriel Isheden - 2020 - Theory and Decision 88 (4):595-607.
    Zeckhauser’s paradox has puzzled and entertained many rationality enthusiasts for almost half a century. You are forced to play a Russian Roulette with a 6-chamber revolver containing either two bullets, or four bullets. Would you pay more to remove the two bullets in than you would to remove one in? Most would say yes, but rational considerations based on the classical utility theory suggest you should not. We discuss a possible solution within the classical framework, by explicitly stating and accounting (...)
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  11.  2
    On the Instability of Majority Decision-Making: Testing the Implications of the ‘Chaos Theorems’ in a Laboratory Experiment.Jan Sauermann - 2020 - Theory and Decision 88 (4):505-526.
    In light of the so-called ‘chaos theorems’ from social choice theory, William Riker argues that the indeterminacy of majority rule leads to voting cycles making democratic decisions arbitrary and meaningless. Moreover, when the core is empty, majority instability correlates with the level of conflict among actors. This study uses laboratory committee decision-making experiments to provide an empirical test of both aspects of Riker’s argument. Committees make repeated majority decisions over 20 periods picking points from a two-dimensional policy space. The experiment (...)
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  12.  4
    On the $$\Gamma $$-Core of Asymmetric Aggregative Games.Giorgos Stamatopoulos - 2020 - Theory and Decision 88 (4):493-504.
    This paper analyzes the core of cooperative games generated by asymmetric aggregative normal-form games, i.e., games where the payoff of each player depends on his strategy and the sum of the strategies of all players. We assume that each coalition calculates its worth presuming that the outside players stand alone and select individually best strategies. We show that under some mild monotonicity assumptions on payoffs, the resulting cooperative game is balanced and has a non-empty core. Our paper thus offers an (...)
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  13.  3
    Topologies for Semicontinuous Richter–Peleg Multi-Utilities.Gianni Bosi, Asier Estevan & Armajac Raventós-Pujol - 2020 - Theory and Decision 88 (3):457-470.
    The present paper gives a topological solution to representability problems related to multi-utility, in the field of Decision Theory. Necessary and sufficient topologies for the existence of a semicontinuous and finite Richter–Peleg multi-utility for a preorder are studied. It is well known that, given a preorder on a topological space, if there is a lower semicontinuous Richter–Peleg multi-utility, then the topology of the space must be finer than the Upper topology. However, this condition fails to be sufficient. Instead of search (...)
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  14.  2
    The Premium as Informational Cue in Insurance Decision Making.Robin Chark, Vincent Mak & A. V. Muthukrishnan - 2020 - Theory and Decision 88 (3):369-404.
    Often in insurance decision making, there are risk factors on which the insurer has an informational advantage over the consumer. But when the insurer sets and posts a premium for the consumer to consider, the consumer can potentially use the premium as an informational cue for the loss probability, and thereby to reduce the insurer’s informational advantage. We study, by means of a behavioral model, how consumers would use the premium as an informational cue in such contexts. The belief formation (...)
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  15.  2
    That’s the Ticket: Explicit Lottery Randomisation and Learning in Tullock Contests.Subhasish M. Chowdhury, Anwesha Mukherjee & Theodore L. Turocy - 2020 - Theory and Decision 88 (3):405-429.
    Most laboratory experiments studying Tullock contest games find that bids significantly exceed the risk-neutral equilibrium predictions. We test the generalisability of these results by comparing a typical experimental implementation of a contest against the familiar institution of a ticket-based raffle. We find that in the raffle initial bid levels are significantly lower and bids adjust more rapidly towards expected-earnings best responses. We demonstrate the robustness of our results by replicating them across two continents at two university labs with contrasting student (...)
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  16.  3
    Resolving Some Contradictions in the Theory of Linear Opinion Pools.A. Philip Dawid & Julia Mortera - 2020 - Theory and Decision 88 (3):453-456.
    Bradley develops some theory of the linear opinion pool, in apparent contradiction to results of Dawid et al.. We investigate the sources of these contradictions, and in particular identify a mathematical error in Bradley that invalidates his main result.
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  17.  7
    Does Time Inconsistency Differ Between Gain and Loss? An Intra-Personal Comparison Using a Non-Parametric Elicitation Method.Shotaro Shiba & Kazumi Shimizu - 2020 - Theory and Decision 88 (3):431-452.
    Several studies on time preference have found time inconsistency in both gain and loss preferences. However, the relationship between the two within the same person remains unclear; that is, does an individual who demonstrates time inconsistency for gain outcomes do so for losses as well? This paper reports on individuals’ time inconsistency for gains and losses in a laboratory setting. To obtain a precise comparison of individuals’ time inconsistency for gains and losses, we used Rohde’s “DI -index” :1700–1716, 2018) and (...)
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  18.  1
    Robust Winner Determination in Positional Scoring Rules with Uncertain Weights.Paolo Viappiani - 2020 - Theory and Decision 88 (3):323-367.
    Scoring rules constitute a particularly popular technique for aggregating a set of rankings. However, setting the weights associated with rank positions is a crucial task, as different instantiations of the weights can often lead to different winners. In this work we adopt minimax regret as a robust criterion for determining the winner in the presence of uncertainty over the weights. Focusing on two general settings we provide a characterization of the minimax regret rule in terms of cumulative ranks, allowing a (...)
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  19.  5
    Expected Discounted Utility.Pavlo Blavatskyy - 2020 - Theory and Decision 88 (2):297-313.
    Standard axioms of additively separable utility for choice over time and classic axioms of expected utility theory for choice under risk yield a generalized expected additively separable utility representation of risk-time preferences over probability distributions over sure streams of intertemporal outcomes. A dual approach is to use the analogues of the same axioms in a reversed order to obtain a generalized additively separable expected utility representation of time–risk preferences over intertemporal streams of probability distributions over sure outcomes. The paper proposes (...)
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  20.  1
    A Formal Framework for Deliberated Judgment.Olivier Cailloux & Yves Meinard - 2020 - Theory and Decision 88 (2):269-295.
    While the philosophical literature has extensively studied how decisions relate to arguments, reasons and justifications, decision theory almost entirely ignores the latter notions. In this article, we elaborate a formal framework to introduce in decision theory the stance that decision-makers take towards arguments and counter-arguments. We start from a decision situation, where an individual requests decision support. We formally define, as a commendable basis for decision-aid, this individual’s deliberated judgment, a notion inspired by Rawls’ contributions to the philosophical literature, and (...)
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  21.  2
    Stochastic Choice Over Menus.Pedram Heydari - 2020 - Theory and Decision 88 (2):257-268.
    Models of choice over menus aim at capturing the effect of some behavioral or non-standard element of decision-making on the behavior of a single decision-maker. These models are usually compared with the standard model of choice over menus, in which the decision-maker chooses a menu whose best item is better than that of all other available ones. However, in many empirical settings such as experimental studies, choice data come from a population of decision-makers with possibly heterogeneous attitudes and tastes. This (...)
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  22.  1
    A Note on Limit Results for the Penrose–Banzhaf Index.Sascha Kurz - 2020 - Theory and Decision 88 (2):191-203.
    It is well known that the Penrose–Banzhaf index of a weighted game can differ starkly from corresponding weights. Limit results are quite the opposite, i.e., under certain conditions the power distribution approaches the weight distribution. Here we provide parametric examples that give necessary conditions for the existence of limit results for the Penrose–Banzhaf index.
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  23.  1
    Ambiguity and Price Competition.R. R. Routledge & R. A. Edwards - 2020 - Theory and Decision 88 (2):231-256.
    There are few models of price competition in a homogeneous-good market which permit general asymmetries of information amongst the sellers. This work studies a price game with discontinuous payoffs in which both costs and market demand are ex ante uncertain. The sellers evaluate uncertain profits with maximin expected utilities exhibiting ambiguity aversion. The buyers in the market are permitted to split between sellers tieing at the minimum price in arbitrary ways which may be deterministic or random. The role of the (...)
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  24.  5
    Probabilities of Electoral Outcomes: From Three-Candidate to Four-Candidate Elections.Hatem Smaoui, Dominique Lepelley & Abdelhalim El Ouafdi - 2020 - Theory and Decision 88 (2):205-229.
    The main purpose of this paper is to compute the theoretical likelihood of some electoral outcomes under the impartial anonymous culture in four-candidate elections by using the last versions of software like LattE or Normaliz. By comparison with the three-candidate case, our results allow to analyze the impact of the number of candidates on the occurrence of these voting outcomes.
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  25.  3
    The Uniqueness of Local Proper Scoring Rules: The Logarithmic Family.Jingni Yang - 2020 - Theory and Decision 88 (2):315-322.
    Local proper scoring rules provide convenient tools for measuring subjective probabilities. Savage, 783–801, 1971) has shown that the only local proper scoring rule for more than two exclusive events is the logarithmic family. We generalize Savage by relaxing the properness and the domain, and provide simpler proof.
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  26.  2
    Telling the Other What One Knows? Strategic Lying in a Modified Acquiring-a-Company Experiment with Two-Sided Private Information.Andrej Angelovski, Daniela Di Cagno, Werner Güth & Francesca Marazzi - 2020 - Theory and Decision 88 (1):97-119.
    Lying for a strategic advantage is to be expected in commercial interactions. But would this be more or less obvious when lying could come from either party and question mutually profitable exchange? To explore this, we modify the acquiring-a-company game by letting both, buyer and seller, be privately informed. Specifically, the value of the company for the buyer is known only by the seller; whereas, only the buyer is aware by which proportion the sellers evaluation is lower than that of (...)
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  27.  8
    Firm’s Protection Against Disasters: Are Investment and Insurance Substitutes or Complements?Giuseppe Attanasi, Laura Concina, Caroline Kamaté & Valentina Rotondi - 2020 - Theory and Decision 88 (1):121-151.
    We use a controlled laboratory experiment to study firm’s protection against potential technological damages. The probability of a catastrophic event is known, and the firm’s costly investment in safety reduces it. The firm can also buy an insurance with full or partial refund against the consequences of the catastrophic event, which ultimately reduces the variance of the firm’s investment-in-safety lottery. The firm makes these two choices simultaneously, after observing the insurance contract proposed by an insurer who chooses this contract within (...)
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  28.  12
    A Test of Risk Vulnerability in the Wider Population.Philomena M. Bacon, Anna Conte & Peter G. Moffatt - 2020 - Theory and Decision 88 (1):37-50.
    Panel data from the German SOEP is used to test for risk vulnerability in the wider population. Two different survey responses are analysed: the response to the question about willingness-to-take risk in general and the chosen investment in a hypothetical lottery. A convenient indicator of background risk is the VDAX index, an established measure of volatility in the German stock market. This is used as an explanatory variable in conjunction with HDAX, the stock market index, which proxies wealth. The impacts (...)
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  29.  12
    States of Nature and States of Mind: A Generalized Theory of Decision-Making.Iain P. Embrey - 2020 - Theory and Decision 88 (1):5-35.
    Canonical economic agents act so as to maximize a single, representative, utility function. However, there is accumulating evidence that heterogeneity in thought processes may be an important determinant of individual behavior. This paper investigates the implications of a vector-valued generalization of the Expected Utility paradigm, which permits agents either to deliberate as per Homo economics, or to act impulsively. This generalized decision theory is applied to explain the crowding-out effect, irrational educational investment decisions, persistent social inequalities, the pervasive influence of (...)
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  30.  2
    Editorial: Foundations of Utility and Risk Conference.John D. Hey & Chris Starmer - 2020 - Theory and Decision 88 (1):1-3.
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  31.  2
    Elicitation and Modelling of Imprecise Utility of Health States.Michał Jakubczyk & Dominik Golicki - 2020 - Theory and Decision 88 (1):51-71.
    Utilities of health states are often estimated to support public decisions in health care. People’s preferences may be imprecise, for lack of actual trade-off experience. We show how to elicit the utilities accounting for imprecision, discover the main drivers of imprecision, and compare several approaches to modelling health state utility data in the fuzzy setting. We extended the time trade-off questionnaire, to elicit utilities of states defined in the EQ-5D-3L descriptive system in184 respondents. Our study demonstrates that respondents are capable (...)
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  32.  3
    An Experimental Investigation of the ‘Tenuous Trade-Off’ Between Risk and Incentives in Organizations.Alexandros Karakostas & Subhasish M. Chowdhury - 2020 - Theory and Decision 88 (1):153-190.
    We investigate experimentally the relationship between risk and incentives in a principal–agent setting. In contrast to the existing empirical literature that describes such relationship as ‘tenuous’ or inconclusive, we find a clear negative relationship—supporting the prediction of the standard theoretical model. Specifically, we find that principals reduce the size of the offered piece rates with an increase in risk and instead provide positive fixed wages. Furthermore, we find no relationship between the variance in the performance and the effort choice of (...)
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  33.  7
    Why Do People Prefer Randomisation? An Experimental Investigation.Yudistira Permana - 2020 - Theory and Decision 88 (1):73-96.
    Increasingly, experimental economists, when eliciting risk preferences using a set of pairwise-choice problems, have given subjects a third choice, namely that of saying, for example, ‘I am not sure about my preference’ or ‘I am not sure what to choose’. The implications for subjects of choosing this third option vary across experiments depending upon the incentive structure. Some experiments provide no direct financial implications: what is ‘played out’ at the end of the experiment is not influenced by subjects choosing this (...)
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