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Title: Lottery Qualities
Authors: Alarie, Yves
Dionne, Georges
Keywords: Lottery choice
Common ratio
Preference reversal
Pricing
Lottery test
Cognitive process
Certainty equivalent
Issue Date: 2006-05
Series/Report no.: Cahiers du CIRPÉE;06-17
Abstract: The aim of this paper is to propose a model of decision-making for lotteries. Lottery qualities are the key concepts of the theory. Qualities allow the derivation of optimal decision-making processes and are taken explicitly into account for lottery evaluation. Our contribution explains the major violations of the expected utility theory for decisions on two-point lotteries and shows the necessity of giving explicit consideration to lottery qualities. Judged certainty equivalent and choice certainty equivalent concepts are discussed in detail along with the comparison of lotteries. Examples are provided by using different test results in the literature.
URI: http://132.203.59.36/CIRPEE/cahierscirpee/2006/files/CIRPEE06-17.pdf
https://depot.erudit.org/id/001108dd
Appears in Collections:Cahiers de recherche du CIRPÉE

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