This article describes a modification of the Allais paradox that induces preferences inconsistent with two conditions weaker than the independence axiom, namely quasi-convexity (a special case of which is the betweenness axiom), and Hypothesis II of Machina (also called fanning-out). These...

Benefit-cost analysis of government projects that reduce health risks over an extended period of time requires an estimate of the value of a future life. This in turn requires a discount rate. We suggest and carry out a method to estimate the discount rate using observations on discrete choices...

We develop a model of risk assessment that incorporates assumptions from the behavioral theory of the firm into conventional expected utility models of compliance, and test the model using data on injuries and OSHA inspections for 6842 manufacturing plants between 1979 and 1985. Four hypotheses...

The role of risk preferences in determining the outcome to bargaining is examined for the case in which acceptance of a proposal requires less than unanimous approval. Using an n-agent extension of the Stahl-Rubinstein alternative offer model, we find that risk preferences play a fundamentally...

We examine the choice-of-single-stage-experiment problem (Raiffa and Schlaifer, 1961) under the assumption that the decider's (weak) preference relation "greater than or equal to" satisfies Schmeidler's (1989) or Gilboa's (1987) axiomatization and is thus representable by a nonadditive...

The Becker-DeGroot-Marschak mechanism is widely used to elicit decisionmakers' selling prices of lotteries. This mechanism leads, however, to the preference reversal phenomenon, which seemed to indicate nontransitive preferences. To solve this puzzle, Karni and Safra (1987) introduced a new...

A well-known property of expected utility theory is that the value of information is nonnegative. Given the widespread dissatisfaction with the expected utility hypothesis, a natural question to ask is whether competing theories of choice preserve this property. This article considers one widely...

This article is an extension of Meyer and Sinn's results on the representation of arbitrary von Neumann-Morgenstern functions in "mu-delta" space when the probability distributions to be compared belong to linear distribution class. It shows that, when absolute risk aversion decreases, stays...

This article compares the performance of the expected utility (EU) and lottery-dependent expected utility (LDEU) models in predicting the actual choices of experimental subjects among risky options. In the process, we present two approaches for calibrating the LDEU model for an individual...