A Comparison of Probabilistic Prize Promotion Schemes

2012 ◽  
Vol 40 (7) ◽  
pp. 1183-1194 ◽  
Author(s):  
Rong Chen ◽  
Jinsong Huang ◽  
Song Su ◽  
Feng He
Keyword(s):  
Optimal Design ◽  
Expected Utility ◽  
Cell Phone ◽  
Utility Model ◽  
Winning Probability ◽  
Behavioral Theories ◽  
Expected Utility Model ◽  
Rank Dependent Expected Utility

Based on the rank-dependent expected utility model (Quiggin, 1991), hypotheses are formed in this study regarding optimal prize promotion structure with reference to associated probabilistic aspects. Referencing both modeling works and related behavioral theories, we compared several design schemes. Using purchase scenarios of a low-value product (bread) and a high-value product (cell phone) we determined the optimal design among promotion schemes that differ by winning probability, prize amount, and number of prize value levels. We found that a promotion offering a combination of high-value prizes plus some low-value prizes was invariably preferred over a promotion offering only high- or low-value prizes. We also explored whether these high- or low-value prizes should be in a series of ascending value or prizes at each value level should be of the same value and whether or not some moderately valuable prizes should also be included.

scholarly journals A Bayesian Method for Characterizing Population Heterogeneity

Games ◽  
2019 ◽  
Vol 10 (4) ◽  
pp. 40
Author(s):  
Dale O. Stahl
Keyword(s):  
Expected Utility ◽  
Laboratory Experiments ◽  
Bayesian Method ◽  
Laboratory Data ◽  
Population Heterogeneity ◽  
Utility Model ◽  
The Subject ◽  
Expected Utility Model ◽  
Rank Dependent Expected Utility ◽  
Lottery Choices

A stylized fact from laboratory experiments is that there is much heterogeneity in human behavior. We present and demonstrate a computationally practical non-parametric Bayesian method for characterizing this heterogeneity. In addition, we define the concept of behaviorally distinguishable parameter vectors, and use the Bayesian posterior to say what proportion of the population lies in meaningful regions. These methods are then demonstrated using laboratory data on lottery choices and the rank-dependent expected utility model. In contrast to other analyses, we find that 79% of the subject population is not behaviorally distinguishable from the ordinary expected utility model.

The Expected Utility of Insurance

2019 ◽  
pp. 8-47
Author(s):  
Brad Epperly
Keyword(s):  
Expected Utility ◽  
Judicial Independence ◽  
Utility Model ◽  
Personal Security ◽  
Power Means ◽  
Democratic Regimes ◽  
The Future ◽  
Autocratic Regimes ◽  
Expected Utility Model

This chapter offers a new version of popular “insurance” models of judicial independence, in which the competitiveness of the electoral arena induces leaders to prefer more independent courts, as a means of offering policy and personal security if they lose power. That is, paying the “premium” of increased constraints on behavior imposed by independent courts now for the insurance of protection in the future if out of office. The crux of the argument is that the risks associated with losing power in autocratic regimes are greater than in democracies, and therefore competition should be more salient in dictatorships than democracies. The stakes are higher because autocratic power means access to wealth and state resources in a way rarely equaled in democratic regimes, and more importantly the likelihood of being punished after leaving office is greater for former autocrats. Judiciaries exercising greater independence, however, can minimize the risks of being a former leader, and the chapter leverages this finding to develop an expected utility model, the empirical implication of which is higher salience of competition—when present—in autocracies. Unlike previous theories of how competition affects independence, this model integrates both the likelihood of losing office and the risks associated with such an outcome, and thus allows us to examine the phenomena across the democracy/dictatorship divide.

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