scholarly journals Discounted and Expected Utility from the Probability and Time Trade-Off Model

Mathematics ◽  
2020 ◽  
Vol 8 (4) ◽  
pp. 601 ◽  
Author(s):  
Salvador Cruz Rambaud ◽  
Ana María Sánchez Pérez
Keyword(s):  
Decision Making ◽  
Expected Utility ◽  
Theoretical Principle ◽  
Utility Model ◽  
Trade Off ◽  
Ptt Model ◽  
Discounted Utility ◽  
Decision Making Processes ◽  
Expected Utility Model ◽  
The Eu

This paper shows the interaction between probabilistic and delayed rewards. In decision- making processes, the Expected Utility (EU) model has been employed to assess risky choices whereas the Discounted Utility (DU) model has been applied to intertemporal choices. Despite both models being different, they are based on the same theoretical principle: the rewards are assessed by taking into account the sum of their utilities and some similar anomalies have been revealed in both models. The aim of this paper is to characterize and consider particular cases of the Time Trade-Off (PPT) model and show that they correspond to the EU and DU models. Additionally, we will try to build a PTT model starting from a discounted and an expected utility model able to overcome the limitations pointed out by Baucells and Heukamp.

scholarly journals Incremental Decision Making Under Risk with the Weighted Expected Utility Model

2017 ◽  
Author(s):  
Hugo Gilbert ◽  
Nawal Benabbou ◽  
Patrice Perny ◽  
Olivier Spanjaard ◽  
Paolo Viappiani
Keyword(s):  
Decision Making ◽  
Decision Maker ◽  
Expected Utility ◽  
Optimal Solution ◽  
Experimental Results ◽  
Utility Model ◽  
Decision Making Under Risk ◽  
Elicitation Procedure ◽  
Expected Utility Model

This paper deals with decision making under risk with the Weighted Expected Utility (WEU) model, which is a model generalizing expected utility and providing stronger descriptive possibilities. We address the problem of identifying, within a given set of lotteries, a (near-)optimal solution for a given decision maker consistent with the WEU theory. The WEU model is parameterized by two real-valued functions. We propose here a new incremental elicitation procedure to progressively reduce the imprecision about these functions until a robust decision can be made. We also give experimental results showing the practical efficiency of our method.

The Theory of Political Ambiguity

1976 ◽  
Vol 70 (3) ◽  
pp. 742-752 ◽  
Author(s):  
Benjamin I. Page
Keyword(s):  
Decision Making ◽  
Expected Utility ◽  
Decision Processes ◽  
Utility Model ◽  
Risky Decision ◽  
Main Condition ◽  
Specific Policy ◽  
Policy Alternatives ◽  
Risk Acceptance ◽  
Expected Utility Model

The ambiguity of politicians' words and actions is sometimes attributed to rational seeking of support or votes. Such an explanation must clearly specify the preferences and decision processes among constituents and the calculations by politicians which make ambiguity seem attractive.The leading effort of this sort is Shepsle's lottery theory, in which politicians take probabilistic stands on issues in order to appeal to risk acceptant, expected-utility-maximizing voters. But the lottery theory suffers from several difficulties. Its predictions are not strong; it can at best account for only certain kinds of observed ambiguous behavior; its main condition for the prediction of ambiguity—risk acceptance among constituents—may not be met; and the expected utility model of risky decision making is not well supported by available evidence.An emphasis allocation theory is suggested as an alternative. According to it, ambiguity involves an effort to reduce the salience of conflictual matters (such as specific policy alternatives) in the evaluation of politicians, so that attention will be paid to consensual appeals (peace, prosperity, honesty in government).

scholarly journals Investigation of the Stochastic Choice under Risk using Experimental Data

2020 ◽  
Vol 22 (2) ◽  
pp. 137
Author(s):  
Yudistira Permana ◽  
Giovanni Van Empel ◽  
Rimawan Pradiptyo
Keyword(s):  
Expected Utility ◽  
Goodness Of Fit ◽  
Random Utility ◽  
Utility Model ◽  
Stochastic Choice ◽  
Decisions Under Risk ◽  
Empirical Performance ◽  
Maximum Likelihood Technique ◽  
Better Than ◽  
The Eu

This paper extends the analysis of the data from the experiment undertaken by Pradiptyo et al. (2015), to help explain the subjects’ behaviour when making decisions under risk. This study specifically investigates the relative empirical performance of the two general models of the stochastic choice: the random utility model (RUM) and the random preference model (RPM) where this paper specifies these models using two preference functionals, expected utility (EU) and rank-dependent expected utility (RDEU). The parameters are estimated in each model using a maximum likelihood technique and run a horse-race using the goodness-of-fit between the models. The results show that the RUM better explains the subjects’ behaviour in the experiment. Additionally, the RDEU fits better than the EU for modelling the stochastic choice. 

The Expected Utility of Insurance

2019 ◽  
pp. 8-47
Author(s):  
Brad Epperly
Keyword(s):  
Expected Utility ◽  
Judicial Independence ◽  
Utility Model ◽  
Personal Security ◽  
Power Means ◽  
Democratic Regimes ◽  
The Future ◽  
Autocratic Regimes ◽  
Expected Utility Model

This chapter offers a new version of popular “insurance” models of judicial independence, in which the competitiveness of the electoral arena induces leaders to prefer more independent courts, as a means of offering policy and personal security if they lose power. That is, paying the “premium” of increased constraints on behavior imposed by independent courts now for the insurance of protection in the future if out of office. The crux of the argument is that the risks associated with losing power in autocratic regimes are greater than in democracies, and therefore competition should be more salient in dictatorships than democracies. The stakes are higher because autocratic power means access to wealth and state resources in a way rarely equaled in democratic regimes, and more importantly the likelihood of being punished after leaving office is greater for former autocrats. Judiciaries exercising greater independence, however, can minimize the risks of being a former leader, and the chapter leverages this finding to develop an expected utility model, the empirical implication of which is higher salience of competition—when present—in autocracies. Unlike previous theories of how competition affects independence, this model integrates both the likelihood of losing office and the risks associated with such an outcome, and thus allows us to examine the phenomena across the democracy/dictatorship divide.

3. Decision-making and democracy in the EU

2020 ◽  
pp. 61-87
Author(s):  
Sylvia de Mars
Keyword(s):  
Decision Making ◽  
Financial Crisis ◽  
Transition Period ◽  
Democratic Deficit ◽  
Eu Law ◽  
Democratic Government ◽  
Decision Making Processes ◽  
Big Events ◽  
The Uk ◽  
The Eu

This chapter analyses what EU academics have termed the ‘democratic deficit’ in the EU. In EU law, the concept of the ‘democratic deficit’ is used to classify the EU as a system that may hold some of the qualities of a democratic government, but is lacking others. The chapter then investigates just how much ‘democracy’ exists in the EU decision-making processes. There are those who claim that the EU will never be democratic, and those who argue that the EU actually does not suffer from true shortcomings. The chapter evaluates both of those claims, and considers if recent big events in the EU — such as the ratification of the Lisbon Treaty, and the so-called Eurozone financial crisis — impact upon the debate. It also looks at the nature of Brexit during the Withdrawal Agreement's transition period, as well as the future relationship between the UK and the EU.

5. Democracy and the EU

2020 ◽  
pp. 101-118
Author(s):  
Tapio Raunio
Keyword(s):  
Decision Making ◽  
European Integration ◽  
Policy Making ◽  
Democratic Legitimacy ◽  
European Level ◽  
Trade Off ◽  
Eu Member States ◽  
The Relationship ◽  
Input Legitimacy ◽  
The Eu

This chapter examines the relationship between European integration and democracy. The continuous transfer of policy-making powers from European Union (EU) member states to the European level has raised serious concerns about democratic legitimacy. The chapter assesses the claims that European integration undermines national democracy, and that decision-making at the EU level is not sufficiently democratic. It argues that while significant challenges remain, European integration has definitely become more democratic over the years. But there is perhaps a trade-off, with stronger input legitimacy potentially an obstacle to efficient European-level decision-making. It also underlines the multilevel nature of the EU polity and the importance of public debates about European integration.

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