We propose a new theory of choice between lotteries, which combines an 'economic’ view of decision making - based on a rational, though incomplete, ordering - with a 'psychological’ view - based on heuristics. This theory can explain observed violations of EU theory, namely all cyclical...

What can it mean for preferences to be rational when transitivity or completenss are not assumed? In this paper we provide a framework and a set of conditions to deal with this question. We provide representation results in terms of a pair of functions, a utility function and a vagueness function.

We propose a novel approach to modelling time preferences, based on a cognitive shortcoming of human decision makers: the perception of future events becomes increasingly `blurred' as the events are pushed further in time. Our model explains behavioural `anomalies' such as preference reversals...

Several contractual situations are such that the parties may `step out' of negotiations and take up outside opportunities only if there is mutual consent to do so. Examples include some forms of employer- employee negotiations, divorce procedures and arbitration. To analyse such cases we develop...

In this paper we formulate and investigate experimentally a model of how individuals choose between sequences of monetary outcomes spread out in time. The theoretical model assumes that a decision-maker uses, in a sequential way, two criteria to screen options. Each criterion only permits a...

In Tversky's (1969) model of a lexicographic semiorder, preference is generated by the sequential application of numerical criteria, by declaring an alternative x better than an alternative y if the first criterion that distinguishes between x and y ranks x higher than y by an amount exceeding a...

We analyse the issue of justice in the allocation of resources across generations. Our starting point is that if all generations have a claim to natural resources, then each generation should be entitled to exercise veto power on the unpalatable choices of the other generations. We analyse this...

Several contractual situations are such that the parties may 'step out' of negotiations and take up outside opportunities only if there is mutual consent to do so. Examples include employer - employee negotiations, divorce and inheritance procedures, and arbitration. To analyse such cases we...