Andersen, Steffen; Harrison, Glenn W.; Igel Lau, Morten; … - 2007
utility is simply the probability weighted utility of each outcome in each
lottery i:
EU
i
= 3
k=1,K
[ p(k) × U(k) ]. (2 …)
The EU for each lottery pair is calculated for a candidate estimate of r, and the index
LEU = EU
R
- EU
L
(3)
calculated …, where EU
L
is the “left” lottery and EU
R
is the “right” lottery. This latent index, based on
latent preferences, is then …