In decision-making tasks with two attributes and three alternatives, the similarity effect implies that, if the total expected utility is equal between two opposite alternatives (i.e., the target and competitor), the probability of the target being chosen decreases with the addition of the decoy similar to the target. This study demonstrated the similarity-compromise effect, wherein the probabi...

This study explored how preference reversals, induced by changes in response mode (choice vs. pricing), are moderated by how lotteries are represented, as being played 1, 10, or 100 times. Ss chose which of a pair of gambles they preferred to play and determined the minimum selling price of each gamble. Replicating previous research, the preference reversal was obtained for single-play represen...

We analyze a symmetric Bayesian game in which two players individually contribute to fund a discrete public good; contributions are refunded if they do not meet a threshold set by the seller of the good. We provide a general characterization of symmetric equilibrium strategies that are continuous and nonconstant over the set of values for which the good has a positive chance of provision. Piece...

Risk adjusted performance measurement for a portfolio involves calculating the contributions to total economic capital for sub-portfolios or single assets. We show that there is only one definition for the contributions which is suitable for performance measurement, namely as derivative of the underlying risk measure with respect to the weight of the considered sub-portfolio or asset. We review...

In this paper, we generalize the parametric ∆-VaR method from portfolios with normally distributed risk factors to portfolios with elliptically distributed ones. We treat both the expected shortfall and the Value-at-Risk of such portfolios. Special attention is given to the particular case of a multivariate t-distribution.

This paper extends our earlier work on reverse Bayesianism by relaxing the assumption that decision makers abide by expected utility theory, assuming instead weaker axioms that merely imply that they are probabilistically sophisticated. We show that our main results, namely, (modified) representation theorems and corresponding rules for updating beliefs over expanding state spaces and null even...