A belief-based account of decision under uncertainty

Article Abstract:

A belief-based model in which judgments of probability and decisions under risk are utilized to predict decisions under uncertainty was proposed. The two-stage model assumes that probability judgments satisfy support theory and decisions under risk satisfy prospect theory. Two experiments, one involving the 1995 National Basketball Assn playoffs and the other the movement of economic indicators in a simulated economic environment, were conducted to examine certain prospects as well as the probability of the respective events. Results showed that decision weights under uncertainty can be predicted from probability judgments of events and risky decision weights. The model also illustrated two independent sources of departure from the classical theory of decision under uncertainty, namely, a preference-based source and a belief-based source.

Management Theory & Techniques, Management, Judgment, Judgment (Psychology), Rational expectations (Economics), Belief and doubt

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Venture theory: a model of decision weights

Article Abstract:

A venture theory model was used to describe the way people evaluate decision weights, and three tests were conducted to determine the accuracy of the model's predictions regarding attitudes toward risk and uncertainty. Research results reveal that nearly all of the model's predictions were supported in two of the tests. The nature of the interaction between probability and payoff contributed to the lack of support for some of the predictions. Research results indicate that venture theory models can be useful in examining the effect of ambiguity in a wide variety of tasks.

Testing, Mathematical models

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Decision making under ambiguity

Article Abstract:

The theories of expected and subjective utility have dominated the study of decision making under ambiguous conditions. However, utility theories fail to address the nature of uncertainty in decision making; the gambling models used in decision making experiments often do not reflect the true nature of real world choices. A model is developed which attempts to describe how decision-makers assess uncertain probabilities. Three experiments are conducted to test the model using the prices for an insurance policy and a warranty.

Psychological aspects, Research, Analysis, Economics, Choice (Psychology), Risk-taking (Psychology), Risk taking, Ambiguity, Marginal utility

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