The Experts below are selected from a list of 198 Experts worldwide ranked by ideXlab platform
James C. Cox - One of the best experts on this subject based on the ideXlab platform.
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Paradoxes and mechanisms for choice under Risk
Experimental Economics, 2015Co-Authors: James C. Cox, Vjollca Sadiraj, Ulrich SchmidtAbstract:Experiments on choice under Risk typically involve multiple Decisions by individual subjects. The choice of mechanism for selecting Decision(s) for payoff is an essential design feature unless subjects isolate each one of the multiple Decisions. We report treatments with different payoff mechanisms but the same Decision tasks. The data show large differences across mechanisms in subjects’ revealed Risk preferences, a clear violation of isolation. We illustrate the importance of these mechanism effects by identifying their implications for classical tests of theories of Decision under Risk. We discuss theoretical properties of commonly used mechanisms, and new mechanisms introduced herein, in order to clarify which mechanisms are theoretically incentive compatible for which theories. We identify behavioral properties of some mechanisms that can introduce bias in elicited Risk preferences—from cross-task contamination—even when the mechanism used is theoretically incentive compatible. We explain that selection of a payoff mechanism is an important component of experimental design in many topic areas including social preferences, public goods, bargaining, and choice under uncertainty and ambiguity as well as experiments on Decisions under Risk.
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Is there a plausible theory for Decision under Risk? A dual calibration critique
Economic Theory, 2012Co-Authors: James C. Cox, Vjollca Sadiraj, Bodo Vogt, Utteeyo DasguptaAbstract:Can any prominent theory of Decision under Risk rationalize both small-stakes Risk aversion and large-stakes Risk aversion? Do some prominent theories fail to rationalize patterns of same-stakes Risk aversion? How do reference payoffs enter in the answer to these questions? What would be the characteristics of a theory of Decision under Risk that would be immune to calibration critique? We offer a theoretical duality analysis that addresses these questions. We report dual propositions and corollaries that calibrate the implications of nonlinear transformation of probabilities or payoffs (or both). We also report several experiments that provide data on the empirical relevance of the two types of calibration patterns.
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Is There a Plausible Theory for Decision under Risk? A Dual Calibration Critique
SSRN Electronic Journal, 2010Co-Authors: James C. Cox, Vjollca Sadiraj, Utteeyo Dasgupta, Bodo VogtAbstract:Theories of Decision under Risk that assume decreasing marginal utility of money have been critiqued with concavity calibration arguments. Since that critique uses varying payoffs and fixed probabilities, it cannot have implications for calibration of nonlinear probability transformation, which is another way to model Risk aversion. The concavity calibration critique also has no implication for theories with variable reference points. This paper introduces a new type of (varying-probabilities, fixed-payoffs) calibration that applies to nonlinear transformation of probabilities. It also applies to theories with constant or variable reference points. The two types of calibrations yield dual paradoxes: a pattern of Risk aversion that conforms to the (resp. dual) independence axiom implies implausible Risk aversion for theories with functionals that are linear in payoffs (resp. probabilities). Functionals that are nonlinear in both payoffs and probabilities are subject to both types of calibration critique. The dual calibrations make clear why plausibility problems with theories of Decision under Risk may be fundamental. They are fundamental if their empirical relevance can be demonstrated. This paper reports seven experiments that provide data on the empirical relevance of the dual calibration critique of Decision theory.
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On the Coefficient of Variation as a Criterion for Decision under Risk
Journal of Mathematical Psychology, 2010Co-Authors: James C. Cox, Vjollca SadirajAbstract:Abstract The coefficient of variation (CV) has been advocated as a measure of Risk sensitivity in meta-analyses of data for Risky choices by animals and humans. We examine properties of the CV measure. We demonstrate that the CV has unsatisfactory normative properties because it is inconsistent with preference for more than for less of the reward medium. Whether or not the CV succeeds as a descriptive criterion depends on its consistency or inconsistency with data. We report two experiments designed to test the distinctive properties of the CV. The experiments involve human subjects motivated by salient monetary payoffs. Data from the experiments do not support the CV as a descriptive criterion for Decision under Risk. We also use data from an experiment designed to test for the incidence of patterns of small-stakes Risk aversion used in concavity calibration. These data also do not support the CV as a good descriptive criterion.
Vjollca Sadiraj - One of the best experts on this subject based on the ideXlab platform.
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Paradoxes and mechanisms for choice under Risk
Experimental Economics, 2015Co-Authors: James C. Cox, Vjollca Sadiraj, Ulrich SchmidtAbstract:Experiments on choice under Risk typically involve multiple Decisions by individual subjects. The choice of mechanism for selecting Decision(s) for payoff is an essential design feature unless subjects isolate each one of the multiple Decisions. We report treatments with different payoff mechanisms but the same Decision tasks. The data show large differences across mechanisms in subjects’ revealed Risk preferences, a clear violation of isolation. We illustrate the importance of these mechanism effects by identifying their implications for classical tests of theories of Decision under Risk. We discuss theoretical properties of commonly used mechanisms, and new mechanisms introduced herein, in order to clarify which mechanisms are theoretically incentive compatible for which theories. We identify behavioral properties of some mechanisms that can introduce bias in elicited Risk preferences—from cross-task contamination—even when the mechanism used is theoretically incentive compatible. We explain that selection of a payoff mechanism is an important component of experimental design in many topic areas including social preferences, public goods, bargaining, and choice under uncertainty and ambiguity as well as experiments on Decisions under Risk.
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Is there a plausible theory for Decision under Risk? A dual calibration critique
Economic Theory, 2012Co-Authors: James C. Cox, Vjollca Sadiraj, Bodo Vogt, Utteeyo DasguptaAbstract:Can any prominent theory of Decision under Risk rationalize both small-stakes Risk aversion and large-stakes Risk aversion? Do some prominent theories fail to rationalize patterns of same-stakes Risk aversion? How do reference payoffs enter in the answer to these questions? What would be the characteristics of a theory of Decision under Risk that would be immune to calibration critique? We offer a theoretical duality analysis that addresses these questions. We report dual propositions and corollaries that calibrate the implications of nonlinear transformation of probabilities or payoffs (or both). We also report several experiments that provide data on the empirical relevance of the two types of calibration patterns.
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Is There a Plausible Theory for Decision under Risk? A Dual Calibration Critique
SSRN Electronic Journal, 2010Co-Authors: James C. Cox, Vjollca Sadiraj, Utteeyo Dasgupta, Bodo VogtAbstract:Theories of Decision under Risk that assume decreasing marginal utility of money have been critiqued with concavity calibration arguments. Since that critique uses varying payoffs and fixed probabilities, it cannot have implications for calibration of nonlinear probability transformation, which is another way to model Risk aversion. The concavity calibration critique also has no implication for theories with variable reference points. This paper introduces a new type of (varying-probabilities, fixed-payoffs) calibration that applies to nonlinear transformation of probabilities. It also applies to theories with constant or variable reference points. The two types of calibrations yield dual paradoxes: a pattern of Risk aversion that conforms to the (resp. dual) independence axiom implies implausible Risk aversion for theories with functionals that are linear in payoffs (resp. probabilities). Functionals that are nonlinear in both payoffs and probabilities are subject to both types of calibration critique. The dual calibrations make clear why plausibility problems with theories of Decision under Risk may be fundamental. They are fundamental if their empirical relevance can be demonstrated. This paper reports seven experiments that provide data on the empirical relevance of the dual calibration critique of Decision theory.
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On the Coefficient of Variation as a Criterion for Decision under Risk
Journal of Mathematical Psychology, 2010Co-Authors: James C. Cox, Vjollca SadirajAbstract:Abstract The coefficient of variation (CV) has been advocated as a measure of Risk sensitivity in meta-analyses of data for Risky choices by animals and humans. We examine properties of the CV measure. We demonstrate that the CV has unsatisfactory normative properties because it is inconsistent with preference for more than for less of the reward medium. Whether or not the CV succeeds as a descriptive criterion depends on its consistency or inconsistency with data. We report two experiments designed to test the distinctive properties of the CV. The experiments involve human subjects motivated by salient monetary payoffs. Data from the experiments do not support the CV as a descriptive criterion for Decision under Risk. We also use data from an experiment designed to test for the incidence of patterns of small-stakes Risk aversion used in concavity calibration. These data also do not support the CV as a good descriptive criterion.
Utteeyo Dasgupta - One of the best experts on this subject based on the ideXlab platform.
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Is there a plausible theory for Decision under Risk? A dual calibration critique
Economic Theory, 2012Co-Authors: James C. Cox, Vjollca Sadiraj, Bodo Vogt, Utteeyo DasguptaAbstract:Can any prominent theory of Decision under Risk rationalize both small-stakes Risk aversion and large-stakes Risk aversion? Do some prominent theories fail to rationalize patterns of same-stakes Risk aversion? How do reference payoffs enter in the answer to these questions? What would be the characteristics of a theory of Decision under Risk that would be immune to calibration critique? We offer a theoretical duality analysis that addresses these questions. We report dual propositions and corollaries that calibrate the implications of nonlinear transformation of probabilities or payoffs (or both). We also report several experiments that provide data on the empirical relevance of the two types of calibration patterns.
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Is There a Plausible Theory for Decision under Risk? A Dual Calibration Critique
SSRN Electronic Journal, 2010Co-Authors: James C. Cox, Vjollca Sadiraj, Utteeyo Dasgupta, Bodo VogtAbstract:Theories of Decision under Risk that assume decreasing marginal utility of money have been critiqued with concavity calibration arguments. Since that critique uses varying payoffs and fixed probabilities, it cannot have implications for calibration of nonlinear probability transformation, which is another way to model Risk aversion. The concavity calibration critique also has no implication for theories with variable reference points. This paper introduces a new type of (varying-probabilities, fixed-payoffs) calibration that applies to nonlinear transformation of probabilities. It also applies to theories with constant or variable reference points. The two types of calibrations yield dual paradoxes: a pattern of Risk aversion that conforms to the (resp. dual) independence axiom implies implausible Risk aversion for theories with functionals that are linear in payoffs (resp. probabilities). Functionals that are nonlinear in both payoffs and probabilities are subject to both types of calibration critique. The dual calibrations make clear why plausibility problems with theories of Decision under Risk may be fundamental. They are fundamental if their empirical relevance can be demonstrated. This paper reports seven experiments that provide data on the empirical relevance of the dual calibration critique of Decision theory.
André Lapidus - One of the best experts on this subject based on the ideXlab platform.
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Adam Smith on lotteries: an interpretation and formal restatement
European Journal of the History of Economic Thought, 2019Co-Authors: Laurie Bréban, André LapidusAbstract:The few pages that Adam Smith devoted to lotteries, mainly in the Wealth of Nations (1776) did not receive much attention. They nonetheless constituted an opportunity to introduce a sophisticated analysis of individual Decision under Risk. Through various examples, Smith pointed out a Risk-seeking attitude, figured out in the paper in terms of inverse stochastic dominance. However, it is well-known that a contradiction occurs between such an attitude and the principle of an asymmetric sensitivity to favorable and unfavorable events, expressed by a concave function, introduced in the Theory of Moral Sentiments (1759). We argue that an appropriate solution to this difficulty should rest on Smith's emphasis on a universal tendency to overestimate the chance of gain, which leads to favor a rank-dependent utility approach within which optimism toward Risk can compensate asymmetric sensibility in order to produce some kind of Risk-seeking. The question raised by the coexistence of various attitudes toward Risk illustrated by the figures of the entrepreneur (typically, the "projector" and the "sober man") gives rise to an extensive analysis, which aims at explaining, on moral grounds, how an initial attitude of Risk-seeking can generate prudence before being transformed into Risk-aversion.
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Pleasure and belief in Hume's Decision process
European Journal of the History of Economic Thought, 2012Co-Authors: Marc-arthur Diaye, André LapidusAbstract:The purpose of this paper is to introduce explicitly pleasure and belief in what aims at being a Humean theory of Decision, like the one developed in Diaye and Lapidus (2005a). Although we support the idea that Hume was in some way a hedonist – evidently different from Bentham's or Jevons' way – we lay emphasis less on continuity than on the specific kind of hedonism encountered in Hume's writings (chiefly the Treatise, the second Enquiry, the Dissertation, or some of his Essays). Such hedonism clearly contrasts to its standard modern inheritance, expressed by the relation between preferences and utility. The reason for such a difference with the usual approach lies in the mental process that Hume puts to the fore in order to explain the way pleasure determines desires and volition. Whereas pleasure is primarily, in Hume's words, an impression of sensation, it takes place in the birth of passions as reflecting an idea of pleasure, whose “force and vivacity” is precisely a “belief”, transferred to the direct passions of desire or volition that come immediately before action. As a result, from a Humean point of view, “belief” deals with Decision under Risk or uncertainty, as well with intertemporal Decision and indiscrimination problems. The latter are explored within a formal framework, and it is shown that the relation of pleasure is transformed by belief into a non-empty class of relations of desire, among which at least one is a preorder.
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Pleasure and belief in Hume's Decision process
2009Co-Authors: Marc-arthur Diaye, André LapidusAbstract:The purpose of this paper is to introduce explicitly pleasure and belief in what aims at being a Humean theory of Decision, like the one developed in Diaye and Lapidus (2005a). Although we support the idea that Hume was in some way – evidently different from Bentham's or Jevons' way – a hedonist, we lay emphasis less on continuity than on the specific kind of hedonism encountered in Hume's writings (chiefly the Treatise, the second Enquiry, the Dissertation, or some of his Essays). Such hedonism clearly contrasts to its standard modern inheritance, expressed by the relation between preferences and utility. The reason for such a difference with the usual approach lies in the mental process that Hume puts to the fore in order to explain the way pleasure determines desires and volition. Whereas pleasure is primarily, in Hume's words, an impression of sensation, it takes place in the birth of passions as reflecting an idea of pleasure, whose “force and vivacity” is precisely a “belief”, transferred to the direct passions of desire or volition which come immediately before action. As a result, from a Humean point of view, “belief” deals as well with Decision under Risk or uncertainty, as with intertemporal Decision and indiscrimination problems. The latter are explored within a formal framework, and it is shown that the relation of pleasure is transformed by belief into a relation of desire, which belongs to a non-empty class of relations, among which at least one is a preorder.
Bodo Vogt - One of the best experts on this subject based on the ideXlab platform.
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Is there a plausible theory for Decision under Risk? A dual calibration critique
Economic Theory, 2012Co-Authors: James C. Cox, Vjollca Sadiraj, Bodo Vogt, Utteeyo DasguptaAbstract:Can any prominent theory of Decision under Risk rationalize both small-stakes Risk aversion and large-stakes Risk aversion? Do some prominent theories fail to rationalize patterns of same-stakes Risk aversion? How do reference payoffs enter in the answer to these questions? What would be the characteristics of a theory of Decision under Risk that would be immune to calibration critique? We offer a theoretical duality analysis that addresses these questions. We report dual propositions and corollaries that calibrate the implications of nonlinear transformation of probabilities or payoffs (or both). We also report several experiments that provide data on the empirical relevance of the two types of calibration patterns.
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Is There a Plausible Theory for Decision under Risk? A Dual Calibration Critique
SSRN Electronic Journal, 2010Co-Authors: James C. Cox, Vjollca Sadiraj, Utteeyo Dasgupta, Bodo VogtAbstract:Theories of Decision under Risk that assume decreasing marginal utility of money have been critiqued with concavity calibration arguments. Since that critique uses varying payoffs and fixed probabilities, it cannot have implications for calibration of nonlinear probability transformation, which is another way to model Risk aversion. The concavity calibration critique also has no implication for theories with variable reference points. This paper introduces a new type of (varying-probabilities, fixed-payoffs) calibration that applies to nonlinear transformation of probabilities. It also applies to theories with constant or variable reference points. The two types of calibrations yield dual paradoxes: a pattern of Risk aversion that conforms to the (resp. dual) independence axiom implies implausible Risk aversion for theories with functionals that are linear in payoffs (resp. probabilities). Functionals that are nonlinear in both payoffs and probabilities are subject to both types of calibration critique. The dual calibrations make clear why plausibility problems with theories of Decision under Risk may be fundamental. They are fundamental if their empirical relevance can be demonstrated. This paper reports seven experiments that provide data on the empirical relevance of the dual calibration critique of Decision theory.
