Date: 2010
Type: Article
Decision Makers Facing Uncertainty: Theory Versus Evidence
Journal of Economic Psychology, 2010, 31, 4, 659-675
GIORDANI, Paolo, SCHLAG, Karl H., ZWART, Sanne, Decision Makers Facing Uncertainty: Theory Versus Evidence, Journal of Economic Psychology, 2010, 31, 4, 659-675
- https://hdl.handle.net/1814/16481
Retrieved from Cadmus, EUI Research Repository
This paper aims at assessing cultural differences in uncertainty attitude across Europe. We select questions from the European Values Survey (EVS) capturing salient features of uncertain scenarios (safe versus uncertain, freedom of choice and reduction of uncertainty), and formalize these questions through simple decision-theoretic problems. We then consider three competing normative models of choice under uncertainty (subjective expected utility (SEU), maximin utility and minimax regret), and analyze how they behave when facing each decision problem. We obtain theoretical predictions and, using the EVS dataset, we test them via latent class analysis to estimate the distribution of these behaviors across EU15. We find a larger proportion of SEU maximizers (Bayesians) in northern countries than in southern countries. The opposite is true for maximin utility behavior. Only a few are consistent with minimax regret behavior. (C) 2010 Elsevier B.V. All rights reserved.
Additional information:
Revised version of EUI MWP WP 2007/27
Cadmus permanent link: https://hdl.handle.net/1814/16481
Full-text via DOI: 10.1016/j.joep.2010.04.004
ISSN: 0167-4870
Publisher: Elsevier Science Bv
Keyword(s): Uncertainty Maximin Minimax regret Bayesianism Cross-cultural differences European Values Survey Latent class analysis
Initial version: http://hdl.handle.net/1814/7362
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