The Descriptive and Predictive Adequacy of Theories of Decision Making Under Uncertainty/Ambiguity

Hey, John D. and Lotito, Gianna and Maffioletti, Anna (2008) The Descriptive and Predictive Adequacy of Theories of Decision Making Under Uncertainty/Ambiguity. [Discussion Paper]. University of York, Department of Economics and Related Studies. p. 53.

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In this paper we examine the performance of theories of decision making under uncertainty/ambiguity from the perspective of their descriptive and predictive power, taking into account the relative parsimony of the various theories. To this end, we employ an innovative experimental design which enables us to reproduce ambiguity in the laboratory in a transparent and non-probabilistic way. We find that judging theories on the basis of their theoretical appeal, or on their ability to do well in testing contexts, is not the same as judging them on the basis of their explanatory and predictive power. We also find that the more elegant theoretical models do not perform as well as simple rules of thumb.

Item Type: Report / Paper (Discussion Paper)
Research documents and activity classification: Working Papers > Non-Refereed Working Papers / of national relevance only
Divisions: Department of Business and Management
Uncontrolled Keywords: Ambiguity. Bingo Blower. Choquet Expected Utility. Decision Field Theory. Decision Making. Expected Utility. Hurwicz Criterion. (Gilboa and Schmeidler) MaxMin EU. (Gilboa and Schmeidler) MaxMax EU. (Ghirardato) Alpha-Mode., MaxMin. MaxMax. Minimum Regret. Prospect Theory. Uncertainty.
MIUR Scientific Area: Area 13 - Economics and Statistics > SECS-P/01 Political Economy
DOI: 4
Deposited by: Barbara Scipioni
Date Deposited: 28 Oct 2009 11:44
Last Modified: 21 Apr 2015 23:10


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