This paper derives two mechanisms through which Bayesian-rational individuals with differing priors will tend to be relatively overconfident about their estimates and predictions, in the sense of overestimating the precision of these estimates. The intuition behind one mechanism is slightly...

Multiattribute utility models and cost-benefit models often arrange the objectives into a hierarchical structure in order to identify appropriate subobjectives and to select appropriate attributes to measure the subobjectives. This paper discusses nonadditive models that use the hierarchical...

This paper investigates the accuracy of an approximation procedure for evaluating alternatives under uncertainty with multiple evaluation attributes. This approximation uses only the first two moments of the probability distributions for the alternatives, and hence it can substantially reduce...

Decision models involving continuous probability distributions almost always require some form of approximation. The usual approach to evaluating these kinds of models is to construct a discrete approximation for each continuous distribution and compute value lotteries and certain equivalents...

Drawing on recent developments in discrete time fixed income options theory, we propose a stochastic programming procedure, which we call stochastic dedication, for managing asset/liability portfolios with interest rate contingent claims. The model uses scenario generation to combine...

Descriptive and normative modeling of decision making under risk and uncertainty have grown apart over the past decade. Psychological models attempt to accommodate the numerous violations of rationality axioms, including independence and transitivity. Meanwhile, normatively oriented decision...

Objectives have long been considered a basis for sound decision making. This research examines the ability of decision makers to generate self-relevant objectives for consequential decisions. In three empirical studies, participants consistently omitted nearly half of the objectives that they...

Preference models and utility functions are often assessed by eliciting value trade-offs among attributes. Prior research has shown that trade-off judgments can be biased in systematic ways: for example, the attribute which is used as response receives more relative subjective weight, i.e. the...

Motivated by the medical literature findings that physicians are inertial, we seek to understand (1) whether physicians exhibit structural persistence in drug choice (structural persistence occurs when the drug chosen for a patient depends structurally on the drug previously prescribed by the...

In this paper we develop a conceptual framework and model for valuing risks to an individual's health and life and to support decision making about investments in health, quality of life, and safety. Our treatment of health risks in the model builds on the popular quality-adjusted-life-year...