Risky Curves

On the Empirical Failure of Expected Utility

Business & Finance, Economics, Microeconomics, Management & Leadership, Decision Making & Problem Solving
Cover of the book Risky Curves by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder, Taylor and Francis
View on Amazon View on AbeBooks View on Kobo View on B.Depository View on eBay View on Walmart
Author: Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder ISBN: 9781317821236
Publisher: Taylor and Francis Publication: February 5, 2014
Imprint: Routledge Language: English
Author: Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
ISBN: 9781317821236
Publisher: Taylor and Francis
Publication: February 5, 2014
Imprint: Routledge
Language: English

For several decades, the orthodox economics approach to understanding choice under risk has been to assume that each individual person maximizes some sort of personal utility function defined over purchasing power. This new volume contests that even the best wisdom from the orthodox theory has not yet been able to do better than supposedly naïve models that use rules of thumb, or that focus on the consumption possibilities and economic constraints facing the individual.

The authors assert this by first revisiting the origins of orthodox theory. They then recount decades of failed attempts to obtain meaningful empirical validation or calibration of the theory. Estimated shapes and parameters of the "curves" have varied erratically from domain to domain (e.g., individual choice versus aggregate behavior), from context to context, from one elicitation mechanism to another, and even from the same individual at different time periods, sometimes just minutes apart.

This book proposes the return to a simpler sort of scientific theory of risky choice, one that focuses not upon unobservable curves but rather upon the potentially observable opportunities and constraints facing decision makers. It argues that such an opportunities-based model offers superior possibilities for scientific advancement. At the very least, linear utility – in the presence of constraints - is a useful bar for the "curved" alternatives to clear.

View on Amazon View on AbeBooks View on Kobo View on B.Depository View on eBay View on Walmart

For several decades, the orthodox economics approach to understanding choice under risk has been to assume that each individual person maximizes some sort of personal utility function defined over purchasing power. This new volume contests that even the best wisdom from the orthodox theory has not yet been able to do better than supposedly naïve models that use rules of thumb, or that focus on the consumption possibilities and economic constraints facing the individual.

The authors assert this by first revisiting the origins of orthodox theory. They then recount decades of failed attempts to obtain meaningful empirical validation or calibration of the theory. Estimated shapes and parameters of the "curves" have varied erratically from domain to domain (e.g., individual choice versus aggregate behavior), from context to context, from one elicitation mechanism to another, and even from the same individual at different time periods, sometimes just minutes apart.

This book proposes the return to a simpler sort of scientific theory of risky choice, one that focuses not upon unobservable curves but rather upon the potentially observable opportunities and constraints facing decision makers. It argues that such an opportunities-based model offers superior possibilities for scientific advancement. At the very least, linear utility – in the presence of constraints - is a useful bar for the "curved" alternatives to clear.

More books from Taylor and Francis

Cover of the book Collaborative Ethnography in Business Environments by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
Cover of the book Nuclear Multilateralism and Iran by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
Cover of the book Real Green by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
Cover of the book Teaching English by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
Cover of the book Private Security Companies during the Iraq War by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
Cover of the book Justice in Africa: Rwanda's Genocide, Its Courts and the UN Criminal Tribunal by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
Cover of the book Knowledge Production by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
Cover of the book Writing History in Film by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
Cover of the book Domestic Role Contestation, Foreign Policy, and International Relations by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
Cover of the book Tradition and Transition in East Africa by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
Cover of the book Remembering Conquest by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
Cover of the book Networking the Globe by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
Cover of the book Online News and the Public by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
Cover of the book Forecasting China's Future by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
Cover of the book Routledge Handbook of American Foreign Policy by Daniel Friedman, R. Mark Isaac, Duncan James, Shyam Sunder
We use our own "cookies" and third party cookies to improve services and to see statistical information. By using this website, you agree to our Privacy Policy