Abstract
Tversky’s contributions to economic modeling of risk provided a criticism of Expected Utility (EU) so strong that it could not be ignored. In particular, Kahneman and Tversky’s 1979 Econometrica paper helped to build an emerging set of literature (see also MacCrimmon and Larsson, 1979) by demonstrating the power of well-executed experiments, eliciting stable choice patterns that provide undisputed evidence of the limitation of choice models using complete rationality under EU. Unlike those in Allais (1953, 1979) that identified extreme situations — an exception that did not change the rule — Kahneman and Tversky’s experiments addressed “real life” decisions, and as a result changed risky choice modeling.
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Buschena, D., Zilberman, D. (1999). Testing the Effects of Similarity and Real Payoffs on Choice. In: Machina, M.J., Munier, B. (eds) Beliefs, Interactions and Preferences in Decision Making. Theory and Decision Library, vol 40. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-4592-4_17
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DOI: https://doi.org/10.1007/978-1-4757-4592-4_17
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