Rethinking Risk Attitude: Aspiration as Pure Risk

There exists no completely satisfactory theory of risk attitude in current normative decision theories. Existing notions confound attitudes to pure risk with unrelated psychological factors such as strength of preference for certain outcomes, and probability weighting. In addition traditional measures of risk attitude frequently cannot be applied to non-numerical consequences, and are not psychologically intuitive. I develop Pure Risk theory which resolves these problems – it is consistent with existing normative theories, and both internalises and generalises the intuitive notion of risk being related to the probability of not achieving one’s aspirations. Existing models which ignore pure risk attitudes may be misspecified, and effects hitherto modelled as loss aversion or utility curvature may be due instead to Pure Risk attitudes.     

Estimating customer utility of energy efficiency standards for refrigerators

A frequent argument against efficiency standards is that they prohibit products that represent optimal choices for customers and thus lead to reduced customer utility. In this paper we propose and test a method to estimate such losses. Conjoint analysis is used to estimate utility functions for individuals that have recently bought a refrigerator. The utility functions are used to calculate the individuals' utility of all the refrigerators available in the market. Revealed utility losses due to non-optimal choices by the customers seem consistent with other data on customer behaviour. The same utility estimates are used to find losses due to energy efficiency standards that remove products from the market. Contrary to previous claims, we find that efficiency standards can lead to increased utility for the average customer. This is possible because customers do not make perfect choices in the first place.     

从中西思维差异谈美学的研究态度

重“理论”与重“实用”体现了中西传统思维差异的一个方面,这一差异使中西学术走上了两条不同的道路,同时也证实了理论学科强大的生命力。对这一差异及其产生的结果的研究为美学发展应采取的学术态度提供了借鉴。     

Why a Decision Maker May Prefer a Seemingly Unfair Gamble

It is generally believed that risk-averse managers will not accept unfair gambles and therefore may not have the incentive to invest in high-risk projects, products or technology. This paper argues that this is not necessarily so. Rational, risk-averse managers with sufficient preference for positive skewness may undertake projects with payoff distributions that are unfair gambles. Furthermore, the minimum required payoff is shown to be less for managers with preference for positive skewness than otherwise. Thus, a risk-averse manager with preference for positive skewness may accept potentially innovative high-risk projects that are rejected by those without such preference.     

A Note on Consistency in Utility Assessment*

A methodology for determining a von Neumann-Morgenstern utility function is outlined based on the axioms crucial to such a function. Reconciliation of inconsistent judgments is facilitated using the theory of reciprocal matrices. Numerical measures of the collective divergence of a set of judgments from perfect consistency or coherency are provided.     

ON THE SENSITIVITY OF BRAND-CHOICE SIMULATIONS TO ATTRIBUTE IMPORTANCE WEIGHTS

This paper critically reviews the report by Green, DeSarbo, and Kedia “on the insensitivity of brand-choice simulations to attribute importance weights”. The review suggests that results from two of their four weight distortion conditions should be viewed with suspicion and that their procedure for selecting brand scores biased the sensitivity analysis and inflated individual-level hit rates. The most unfortunate problem is that their simulation-experimental design precludes a global test of the main research issue. Results are presented from an alternative simulation approach that has the power to detect the sensitivity of brand shares to a wide range of conditions that affect the shape of attribute weight distributions. The results suggest that conclusions of Green, DeSarbo, and Kedia apply only to a limited domain and would not obtain in many likely market situations. Extensions to nonadditive decision structures are suggested and several unresolved issues are outlined.