Haridon, L', O. (Olivier)
http://repub.eur.nl/ppl/14110/
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RePub, Erasmus University RepositoryProspect theory in the health domain: A quantitative assessment
http://repub.eur.nl/pub/41672/
Sun, 01 Dec 2013 00:00:01 GMT<div>Attema, A.E.</div><div>Brouwer, W.B.F.</div><div>Haridon, L', O.</div>
It is well-known that expected utility (EU) has empirical deficiencies. Cumulative prospect theory (CPT) has developed as an alternative with more descriptive validity. However, CPT's full function had not yet been quantified in the health domain. This paper is therefore the first to simultaneously measure utility of life duration, probability weighting, and loss aversion in this domain.We observe loss aversion and risk aversion for gains and losses, which for gains can be explained by probabilistic pessimism. Utility for gains is almost linear. For losses, we find less weighting of probability 1/2 and concave utility. This contrasts with the common finding of convex utility for monetary losses. However, CPT was proposed to explain choices among lotteries involving monetary outcomes. Life years are arguably very different from monetary outcomes and need not generate convex utility for losses. Moreover, utility of life duration reflects discounting, causing concave utility. Ambiguity models and the machina paradoxes
http://repub.eur.nl/pub/25729/
Wed, 01 Jun 2011 00:00:01 GMT<div>Baillon, A.</div><div>Haridon, L', O.</div><div>Placido, L.</div>
Machina (2009) introduced two examples that falsify Choquet expected utility, presently one of the most popular models of ambiguity. This article shows that Machina's examples falsify not only the model mentioned, but also four other popular models for ambiguity of the literature, namely maxmin expected utility, variational preferences, α-maxmin, and the smooth model of ambiguity aversion. Thus, Machina's examples pose a challenge to most of the present field of ambiguity. Finally, the paper discusses how an alternative representation of ambiguity-averse preferences works to accommodate the Machina paradoxes and what drives the results.Separating curvature and elevation: A parametric probability weighting function
http://repub.eur.nl/pub/20152/
Mon, 14 Jun 2010 00:00:01 GMT<div>Abdellaoui, M.</div><div>Haridon, L', O.</div><div>Zank, H.</div>
This paper presents a preference foundation for a two-parameter family of probability weighting functions. We provide a theoretical link between the well-established notions of probabilistic risk attitudes (i. e., optimism and pessimism) used in economics and the important independent measures for individual behavior used in the psychology literature (i. e., curvature and elevation). One of the parameters in our model measures curvature and represents the diminishing effect of optimism and pessimism when moving away from extreme probabilities 0 and 1. The other parameter measures elevation and represents the relative strength of optimism vs. pessimism. Our empirical analysis indicates that the new weighting function fits elicited probability weights well, and that it can explain differences in the treatment of probabilities for gains compared to that for probabilities of losses.A tractable method to measure utility and loss aversion under prospect theory
http://repub.eur.nl/pub/26890/
Sun, 01 Jun 2008 00:00:01 GMT<div>Abdellaoui, M.</div><div>Bleichrodt, H.</div><div>Haridon, L', O.</div>
This paper provides an efficient method to measure utility under prospect theory. Our method minimizes both the number of elicitations required to measure utility and the cognitive burden for subjects, being based on the elicitation of certainty equivalents for two-outcome prospects. We applied our method in an experiment and were able to replicate the main findings on prospect theory, suggesting that our method measures what it is intended to. Our data confirmed empirically that risk seeking and concave utility can coincide under prospect theory. Utility did not depend on the probability used in the elicitation, which offers support for the validity of prospect theory. A Tractable Method to Measure Utility and Loss Aversion under Prospect Theory
http://repub.eur.nl/pub/11075/
Mon, 01 Jan 2007 00:00:01 GMT<div>Abdellaoui, M.</div><div>Bleichrodt, H.</div><div>Haridon, L', O.</div>
This paper provides an efficient method to measure utility under prospect theory, the most
important descriptive theory of decision under uncertainty today. Our method is based on the
elicitation of certainty equivalents for two-outcome prospects, a common way to measure
utility. We applied our method in an experiment and found that most subjects were risk
averse for gains and risk seeking for losses but had concave utility both for gains and for
losses. This finding illustrates empirically that risk seeking and concave utility can coincide
under prospect theory, a result that was derived theoretically by Chateauneuf and Cohen
(1994). Utility was steeper for losses than for gains, which is consistent with loss aversion.
Utility did not depend on the probability used in the elicitation, which offers support for
prospect theory.