Affective decision making: A theory of optimism bias

Optimism bias is inconsistent with the independence of decision weights and payoffs found in models of choice under risk and uncertainty, such as expected utility theory, subjective expected utility, and prospect theory. We therefore propose an alternative model of risky and uncertain choice where decision weights—affective or perceived risk—are endogenous.

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Year of publication:	2012
Authors:	Bracha, Anat ; Brown, Donald J.
Published in:	Games and Economic Behavior. - Elsevier, ISSN 0899-8256. - Vol. 75.2012, 1, p. 67-80
Publisher:	Elsevier
Subject:	Affective expected utility \| Optimism bias \| Demand for insurance

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Type of publication:	Article
Classification:	D01 - Microeconomic Behavior: Underlying Principles ; D81 - Criteria for Decision-Making under Risk and Uncertainty ; G22 - Insurance; Insurance Companies
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011049718