It's well-known that expected utility theory has a lot of problems. A
number of alternative theories of choice under uncertainty haven't
worked out too well either.
Has anyone ever proposed a bare-bones theory of choice under
uncertainty, basically saying only that all else equal, you become more
likely to choose an option as it's expected value increases (without
saying how much)? Suppose, for example, that you get to choose between
two gambles:
Gamble 1: $X with probability p.
Gamble 2: $Y with probability q.
Indicate preference with > or <, and probability as P(.).
My bare bones theory says:
1. P(1>2) increases in p.
2. P(1>2) decreases in q.
3. P(1>2) increases in X.
4. P(1>2) decreases in Y.
and nothing more specific.
Is this inconsistent with any experimental evidence?
--
Prof. Bryan Caplan
Department of Economics George Mason University
http://www.bcaplan.com [EMAIL PROTECTED]
"He wrote a letter, but did not post it because he felt that no one
would have understood what he wanted to say, and besides it was not
necessary that anyone but himself should understand it."
Leo Tolstoy, *The Cossacks*
