Error-induced certainty equivalents: A set-theoretical approach to choice under risk

  1. Francisco Javier Santos Arteaga 1
  2. Debora Di Caprio 2
  1. 1 Universidad Complutense de Madrid
    info

    Universidad Complutense de Madrid

    Madrid, España

    ROR 02p0gd045

  2. 2 University of Trento
    info

    University of Trento

    Trento, Italia

    ROR https://ror.org/05trd4x28

Revista:
International Journal of Contemporary Mathematical Sciences

Año de publicación: 2008

Volumen: 3

Páginas: 1121-1131

Tipo: Artículo

GOOGLE SCHOLAR lock_openAcceso abierto editor

Resumen

We consider the existence problem of errors in decision making processes under risk from a set-theoretical perspective. Choice adjustmenterrors have been identified but never formalized by the experimentaleconomics/decision theory literature. We show that choice adjustmenterrors can be naturally derived from gaps in the range of the utilityfunctions of decision makers. Introducing the concept of “error-inducedcertainty equivalent”, we account for the intrinsic generation of errorapproximations in any decision making process under risk. Finally, theexistence problem of minimal error functions is shown to be equivalent to that of determining best approximations to the expected utilityvalues defined by the corresponding decision processes.

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