The concept of a non-extreme-outcome-additive capacity (neo-additive capacity ) is introduced. Neo-additive capacities model optimistic and pessimistic attitudes towards uncertainty as observed in many experimental studies. Moreover, neo-additive capacities can be applied easily in economic...

We present a definition of increasing uncertainty, in which an elementary increase in the uncertainty of any act corresponds to the addition of an `elementary bet' that increases consumption by a fixed amount in (relatively) `good' states and decreases consumption by a fixed (and possibly...

We survey recent theoretical research on the effects of short-term share-price based marginal incentive schemes. Such schemes can induce inefficient managerial behaviour in both hidden action and hidden type contexts. These problems arise from informational asymmetries: managers take actions to...

In recent years there has been a growing theoretical, experimental and empirical challenge to Expected Utility Theory, the overwhelmingly dominant paradigm for modeling decision-making under risk. However, there has been relatively little work done in providing easily parameterized alternatives...

This note shows that capacities satisfying the axioms consquentialism, state independence and conditional certainty equivalent consistency under updating are a generalised version of neoadditive capacities as axiomatised in Chateauneuf, Eichberger, and Grant (2007). 1

This paper investigates the dynamic consistency of CEU preferences. A decision maker is faced with an information structure represented by a fixed filtration. If beliefs are represented by a convex capacity, we show that a necessary and sufficient condition for dynamic consistency is that...

We provide a set of simple and intuitive axioms that allow for a direct and constructive proof of the Choquet Expected Utility representation for decision making under uncertainty.

What is the relationship between an agent's attitude towards information, and her attitude towards risk? If an agent always prefers more information, does this imply that she obeys the independence axiom? We provide a substitution property on preferences that is equivalent to the agent...