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  • About
  • The Global ETD Search service is a free service for researchers to find electronic theses and dissertations. This service is provided by the Networked Digital Library of Theses and Dissertations.
    Our metadata is collected from universities around the world. If you manage a university/consortium/country archive and want to be added, details can be found on the NDLTD website.
1

The roll of description and experience in the decision weights of rare and customary events

Penner, Daniella 02 September 2014 (has links)
A recent debate has identified a description– experience gap, where the non-linear weighting function identified in prospect theory reverses when probabilities are discovered through experience rather than by description (probabilities). This thesis will explore the role of experience and probabilities theoretically and empirically. It is argued that both behaviors are compatible on a theoretical basis given a preference for the status quo, but produce opposing decision weights due to different cognitive and motivational factors. Probabilities focus a decision on the potential for rare events creating a preference for certain outcomes and reduced risk taking consistent with loss aversion. Experience overweighs customary outcomes consistent with sensitivity to a reference point or the status quo. Experience in the form of loss, however, moderates the effect of probabilities on risk taking. An experimental game of dice supports this hypothesis, suggesting ambiguity seeking in the face of loss and raising the possibility that the use of probabilities may not be always be maximizing behavior.

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