An explanation and characterization for the buying of lotteries

Authors
  • H. Fennema
  • P.P. Wakker
Publication date 1994
Host editors
  • S. Rios
Book title Decision theory and decision analysis: trends and challenges
ISBN
  • 0792394666
  • 9780792394662
Pages (from-to) 163-175
Publisher Boston: Kluwer Academic Publishers
Organisations
  • Faculty of Economics and Business (FEB) - Amsterdam School of Economics Research Institute (ASE-RI)
Abstract Popular lotteries typically give a very small probability to win a large prize and a moderate chance to win a smaller prize. In this paper a rank dependent model is axiomatized with an S-shaped weighting function, capable of giving an account for the popularity of these lotteries. Also, the role of utility, loss aversion and scale compatibility in explaining the buying of lotteries is discussed. Correctie: http://www1.fee.uva.nl/creed/wakker/pdf/heiancor.pdf
Document type Chapter
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