Article history: Received 26 April 2007 Received in revised form 8 February 2008 Accepted 6 March 2008 Available online xxxx OO We consider the meaning of the option price, commonly acknowledged as the preferred ex ante welfare measure, in the rank-dependent expected utility (RDEU) framework. The importance of this pertains to performing benefit-cost analysis when RDEU maximizers are prevalent ...

Some commentators view my analyses (Clark, 2012, this issue) as an important step forward in assessing the costs and benefits of eyewitness identification reform. Others suggest that the trade-off between correct identifications lost and false identifications avoided is well-known; that the expected utility model is misspecified; and that the loss of correct identifications due to the use of re...

We show, in the Choquet expected utility model, that preference for diversi cation, that is, convex preferences, is equivalent to a concave utility index and a convex capacity. We then introduce a weaker notion of diversi cation, namely \sure diversication." We show that this implies that the core of the capacity is non-empty. The converse holds under concavity of the utility index. This proper...

A linear utility model is introduced for optimal selection when several subpopulations of applicants are to be distinguished. Using this model, procedures are described for obtaining optimal cutting scores in subpopulations in quota-free as well as quota-restricted selection situations. The cutting scores are optimal in the sense that they maximize the overall expected utility of the selection ...

In this paper, the concomitants of case-II of generalized order statistics from Farlie-Gumbel-Morgenstern (FGM) distributions and recurrence relations between their moments are studied. Further, we provide the minimum variance linear unbiased estimator of the location and scale parameters of the concomitants of ordinary order statistics from some distributions.

We construct a decision-theoretic model of turnout, in which individuals maximize their subjective expected utility in a context of repeated elections. In the model a nonnegative signaling motivation to vote exists for all citizens, regardless of their ideology or beliefs about the closeness of the election, and is proportional to a citizen's external efficacy, patience, and electoral pessimism...

A shadow price is a process S̃ lying within the bid/ask prices S, S of a market with proportional transaction costs, such that maximizing expected utility from consumption in the frictionless market with price process S̃ leads to the same maximal utility as in the original market with transaction costs. For finite Ω, this note provides an elementary proof for the existence of such a shadow price.

We generalize the classical expected-utility criterion by weakening transitivity to Suzumura consistency. In the absence of full transitivity, reflexivity and completeness no longer follow as a consequence of the system of axioms employed and a richer class of rankings of probability distributions results. This class is characterized by means of standard expected-utility axioms in addition to S...

This paper states necessary and sufficient conditions for the existence, uniqueness, and updating according to Bayes’ rule, of subjective probabilities representing individuals’ beliefs. The approach is preference based, and the result is an axiomatic subjective expected utility model of Bayesian decision making under uncertainty with statedependent preferences. The theory provides foundations ...

The theory of subjective expected utility has been recently extended to allow ambiguity to matter for choice. We propose a notion of absolute ambiguity aversion by building on a notion of comparative ambiguity aversion. We characterize it for a preference model which encompasses some of the most popular models in the literature. We next build on these ideas to provide a definition of unambiguou...