A Model of Probabilistic Choice Satisfying First-Order Stochastic Dominance

• 成果类型: Article
• 署名作者: Blavatskyy, Pavlo R.
• 署名单位: University of Innsbruck
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.1100.1285
• 发表日期: 2011
• 页码: 542-548
• 关键词: PROBABILISTIC CHOICE; first-order stochastic dominance; random utility; strong utility

摘要

This paper presents a new model of probabilistic binary choice under risk. In this model, a decision maker always satisfies first-order stochastic dominance. If neither lottery stochastically dominates the other alternative, a decision maker chooses in a probabilistic manner. The proposed model is derived from four standard axioms (completeness, weak stochastic transitivity, continuity, and common consequence independence) and two relatively new axioms. The proposed model provides a better fit to experimental data than do existing models. The baseline model can be extended to other domains such as modeling variable consumer demand.