Explanation of the Allais paradox and the preference of many for multiple prize lottery tickets provide a rationale for why a model of agent's choice under uncertainty should embody the assumption that they distort probabilities. However the degree of probability distortion required to explain...

Lancaster University Management School

In a unique study Harbaugh, Krause and Vesterlund (2002), reported the interesting result that children exhibit different probability weighting to adults. In particular, children underweighted small probabilities. An objective of this paper is to re-examine this issue employing children...