scholarly journals Revealed preference analysis of expected utility maximization under prize-probability trade-offs

Author(s):  
Laurens Cherchye ◽  
Thomas Demuynck ◽  
Bram De Rock ◽  
Mikhail Freer
2014 ◽  
Vol 104 (11) ◽  
pp. 3459-3480 ◽  
Author(s):  
Felix Kubler ◽  
Larry Selden ◽  
Xiao Wei

We provide conditions under which contingent claim and asset demands are consistent with state independent Expected Utility maximization. The paper focuses on the case of a single commodity and demands are allowed to be functions of probabilities and not just prices and income. We extend prior analyses by deriving three distinct tests for demands to be rationalized by Expected Utility: (i) a contingent claim analogue to the certainty strong axiom of revealed preference, (ii) a characterization of the functional form for demand, and (iii) necessary and sufficient conditions based on the Slutsky matrix. (JEL D01, D11, D81)


2021 ◽  
Vol 21 (1) ◽  
Author(s):  
Darren E. Stewart ◽  
Dallas W. Wood ◽  
James B. Alcorn ◽  
Erika D. Lease ◽  
Michael Hayes ◽  
...  

Abstract Background The patient ranking process for donor lung allocation in the United States is carried out by a classification-based, computerized algorithm, known as the match system. Experts have suggested that a continuous, points-based allocation framework would better serve waiting list candidates by removing hard boundaries and increasing transparency into the relative importance of factors used to prioritize candidates. We applied discrete choice modeling to match run data to determine the feasibility of approximating current lung allocation policy by one or more composite scores. Our study aimed to demystify the points-based approach to organ allocation policy; quantify the relative importance of factors used in current policy; and provide a viable policy option that adapts the current, classification-based system to the continuous allocation framework. Methods Rank ordered logistic regression models were estimated using 6466 match runs for 5913 adult donors and 534 match runs for 488 pediatric donors from 2018. Four primary attributes are used to rank candidates and were included in the models: (1) medical priority, (2) candidate age, (3) candidate’s transplant center proximity to the donor hospital, and (4) blood type compatibility with the donor. Results Two composite scores were developed, one for adult and one for pediatric donor allocation. Candidate rankings based on the composite scores were highly correlated with current policy rankings (Kendall’s Tau ~ 0.80, Spearman correlation > 90%), indicating both scores strongly reflect current policy. In both models, candidates are ranked higher if they have higher medical priority, are registered at a transplant center closer to the donor hospital, or have an identical blood type to the donor. Proximity was the most important attribute. Under a points-based scoring system, candidates in further away zones are sometimes ranked higher than more proximal candidates compared to current policy. Conclusions Revealed preference analysis of lung allocation match runs produced composite scores that capture the essence of current policy while removing rigid boundaries of the current classification-based system. A carefully crafted, continuous version of lung allocation policy has the potential to make better use of the limited supply of donor lungs in a manner consistent with the priorities of the transplant community.


2021 ◽  
Author(s):  
isaac davis ◽  
Ryan W. Carlson ◽  
Yarrow Dunham ◽  
Julian Jara-Ettinger

We propose a computational model of social preference judgments that accounts for the degree of an agents’ uncertainty about the preferences of others. Underlying this model is the principle that, in the face of social uncertainty, people interpret social agents’ behavior under an assumption of expected utility maximization. We evaluate our model in two experiments which each test a different kind of social preference reasoning: predicting social choices given information about social preferences, and inferring social preferences after observing social choices. The results support our model and highlight how un- certainty influences our social judgments.


Author(s):  
Armin W. Schulz

A number of scholars argue that human and animal decision making, at least to the extent that it is driven by representational mental states, should be seen to be the result of the application of a vast array of highly specialized decision rules. By contrast, other scholars argue that we should see human and animal representational decision making as the result of the application of a handful general principles—such as expected utility maximization—to a number of specific instances. This chapter shows that, using the results of chapters 5 and 6, it becomes possible to move this dispute forwards: the account of the evolution of conative representational decision making defended in chapter 6 together with the account of the evolution of cognitive representational decision making defended in chapter 5, makes clear that both sides of this dispute contain important insights, and that it is possible to put this entire dispute on a clearer and more precise foundation. Specifically, I show that differentially general decision rules are differentially adaptive in different circumstances: certain particular circumstances favor specialized decision making, and certain other circumstances favor more generalist decision making.


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