EXPERIMENTAL INVESTIGATIONS OF ERRORS IN DECISION-MAKING UNDER RISK

Many, if not all, of the recent theories of decision making under risk , that have been developed in the light of experimentally observed vio lations of Expected Utility theory, are essentially deterministic in n ature, yet it is clear that actual decision making contains a random o r error component. This paper surveys the assumptions that have been e mployed in previous analyses of such experimental data, and tries to f ind better explanations (both from an economic and an econometrics poi nt of view), of such errors. Hopefully, such work will lead to a unifi ed theory, in which the stochastic component is an integral part.