Decision weights in anticipated utility theory: Response to Segal |
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| Affiliation: | 1. Institute of Information Engineering, Automation and Mathematics, Slovak University of Technology in Bratislava, Radlinskeho 9, Bratislava, Slovakia;2. Departamento de Estadística, Informática y Matemáticas, Universidad Pública de Navarra, Campus Arrosadía s/n, P.O. Box 31006, Pamplona, Spain;3. Institute of Smart Cities, Universidad Pública de Navarra, Pamplona, Spain;1. Department of Computer Science and A.I., University of Granada, 18071 Granada, Spain;2. Centre for Computational Intelligence, De Montfort University, Leicester, UK;3. Iwate Prefectural University, Takizawa, Iwate, Japan;4. Department of Electrical and Computer Engineering, King Abdulaziz University, Jeddah, Saudi Arabia |
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| Abstract: | The Anticipated Utility model permits the incorporation of decision weights into a model of choice under uncertainty which maintains the desirable properties of transitivity and preservation of dominance. In order to model choice it is necessary to impose appropriate conditions on the decision weighting function. Segal has argued that the function should be concave so that less favorable outcomes are always given more weight than the favorable ones. In this paper it is argued that outlying low probability events, whether favorable or unfavorable, are likely to be ‘overweighted’. |
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