scholarly journals Incremental Decision Making Under Risk with the Weighted Expected Utility Model

2017 ◽  
Author(s):  
Hugo Gilbert ◽  
Nawal Benabbou ◽  
Patrice Perny ◽  
Olivier Spanjaard ◽  
Paolo Viappiani
Keyword(s):  
Decision Making ◽  
Decision Maker ◽  
Expected Utility ◽  
Optimal Solution ◽  
Experimental Results ◽  
Utility Model ◽  
Decision Making Under Risk ◽  
Elicitation Procedure ◽  
Expected Utility Model

This paper deals with decision making under risk with the Weighted Expected Utility (WEU) model, which is a model generalizing expected utility and providing stronger descriptive possibilities. We address the problem of identifying, within a given set of lotteries, a (near-)optimal solution for a given decision maker consistent with the WEU theory. The WEU model is parameterized by two real-valued functions. We propose here a new incremental elicitation procedure to progressively reduce the imprecision about these functions until a robust decision can be made. We also give experimental results showing the practical efficiency of our method.

The Theory of Political Ambiguity

1976 ◽  
Vol 70 (3) ◽  
pp. 742-752 ◽  
Author(s):  
Benjamin I. Page
Keyword(s):  
Decision Making ◽  
Expected Utility ◽  
Decision Processes ◽  
Utility Model ◽  
Risky Decision ◽  
Main Condition ◽  
Specific Policy ◽  
Policy Alternatives ◽  
Risk Acceptance ◽  
Expected Utility Model

The ambiguity of politicians' words and actions is sometimes attributed to rational seeking of support or votes. Such an explanation must clearly specify the preferences and decision processes among constituents and the calculations by politicians which make ambiguity seem attractive.The leading effort of this sort is Shepsle's lottery theory, in which politicians take probabilistic stands on issues in order to appeal to risk acceptant, expected-utility-maximizing voters. But the lottery theory suffers from several difficulties. Its predictions are not strong; it can at best account for only certain kinds of observed ambiguous behavior; its main condition for the prediction of ambiguity—risk acceptance among constituents—may not be met; and the expected utility model of risky decision making is not well supported by available evidence.An emphasis allocation theory is suggested as an alternative. According to it, ambiguity involves an effort to reduce the salience of conflictual matters (such as specific policy alternatives) in the evaluation of politicians, so that attention will be paid to consensual appeals (peace, prosperity, honesty in government).

scholarly journals Discounted and Expected Utility from the Probability and Time Trade-Off Model

Mathematics ◽  
2020 ◽  
Vol 8 (4) ◽  
pp. 601 ◽  
Author(s):  
Salvador Cruz Rambaud ◽  
Ana María Sánchez Pérez
Keyword(s):  
Decision Making ◽  
Expected Utility ◽  
Theoretical Principle ◽  
Utility Model ◽  
Trade Off ◽  
Ptt Model ◽  
Discounted Utility ◽  
Decision Making Processes ◽  
Expected Utility Model ◽  
The Eu

This paper shows the interaction between probabilistic and delayed rewards. In decision- making processes, the Expected Utility (EU) model has been employed to assess risky choices whereas the Discounted Utility (DU) model has been applied to intertemporal choices. Despite both models being different, they are based on the same theoretical principle: the rewards are assessed by taking into account the sum of their utilities and some similar anomalies have been revealed in both models. The aim of this paper is to characterize and consider particular cases of the Time Trade-Off (PPT) model and show that they correspond to the EU and DU models. Additionally, we will try to build a PTT model starting from a discounted and an expected utility model able to overcome the limitations pointed out by Baucells and Heukamp.

scholarly journals Fixation patterns in simple choice reflect optimal information sampling

2019 ◽  
Author(s):  
Frederick Callaway ◽  
Antonio Rangel ◽  
Tom Griffiths
Keyword(s):  
Decision Making ◽  
Decision Maker ◽  
Sequential Sampling ◽  
Empirical Work ◽  
Reaction Times ◽  
Optimal Solution ◽  
Cognitive Resources ◽  
Human Decision ◽  
Information Sampling ◽  
Optimal Information

When faced with a decision between several options, people rarely fully consider every alternative. Instead, we direct our attention to the most promising candidates, focusing our limited cognitive resources on evaluating the options that we are most likely to choose. A growing body of empirical work has shown that attention plays an important role in human decision making, but it is still unclear how people choose with option to attend to at each moment in the decision making process. In this paper, we present an analysis of how a rational decision maker should allocate her attention. We cast attention allocation in decision making as a sequential sampling problem, in which the decision maker iteratively selects from which distribution to sample in order to update her beliefs about the values of the available alternatives. By approximating the optimal solution to this problem, we derive a model in which both the selection and integration of evidence are rational. This model predicts choices and reaction times, as well as sequences of visual fixations. Applying the model to a ternary-choice dataset, we find that its predictions align well with human data.

scholarly journals Support of decision-making under risk by a risk-averse decision-maker

2020 ◽  
Vol 13 ◽  
Author(s):  
Andrzej Łodziński
Keyword(s):  
Decision Making ◽  
Decision Support ◽  
Decision Maker ◽  
The State ◽  
Decision Making Process ◽  
Discrete Problem ◽  
Risk Averse ◽  
Control Parameters ◽  
Decision Making Under Risk ◽  
State Of The Environment

The paper presents the decision support under risk by the risk averse decision maker. Decision making under risk occurs when the result of the decision is not unequivocal and depends on the state of the environment. The decision making process is modeled with the use of multi-criteria optimization. The decision is made by solving the problem with the control parameters that determine the decision maker's aspirations and the evaluation of the solutions received. The decision maker asks the parameter for which the solution is determined. Then, evaluate the solution received accepting or rejecting it. In the second case, the decision maker gives a new parameter value and the problem is solved again for the new parameter. The work includes an simple discrete problem of decision support under risk

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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