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    A Theory of Coarse Utility

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    Shenoy NewHeuristic.pdf (1.032Mb)
    Issue Date
    1995
    Author
    Liu, Liping
    Shenoy, Prakash P.
    Publisher
    Kluwer Academic Publishers
    Type
    Article
    Article Version
    Scholarly/refereed, author accepted manuscript
    Published Version
    http://web.ku.edu/~pshenoy/Papers/JRU95.pdf
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    Abstract
    This article presents a descriptive theory for complex choice problems. In line with the bounded rationality assumption, we hypothesize that decision makers modify a complex choice into some coarse approximations, each of which is a binary lottery. We define the value of a best coarse approximation to be the utility of the choice. Using this paradigm, we axiomatize and justify a new utility function called the coarse utility function. We show that the coarse utility function approximates the rank- and sign-dependent utility function. It satisfies dominance but admits violations of independence. It reduces judgmental load and allows flexible judgmental information. It accommodates phenomena associated with probability distortions and provides a better resolution to the St. Petersburg paradox than the expected and rank-dependent theories.
    Description
    This is the author's final draft. The publisher's official version is available electronically from: <http://link.springer.com/content/pdf/10.1007%2Fs10479-012-1171-9>.
    URI
    http://hdl.handle.net/1808/10977
    Collections
    • School of Business Scholarly Works [212]
    • Distinguished Professors Scholarly Works [918]
    Citation
    Shenoy, Prakash. (1995) A Theory of Coarse Utility. Journal of Risk and Uncertainty, 11 (1), 17--49.

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    Contact KU ScholarWorks
    785-864-8983
    KU Libraries
    1425 Jayhawk Blvd
    Lawrence, KS 66045
    785-864-8983

    KU Libraries
    1425 Jayhawk Blvd
    Lawrence, KS 66045
    Image Credits
     

     

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