RISKY CHOICE AND WEBERS LAW

We present a family of models of choice between behavioural alternativ es with stochastic outcomes (risky choice) based on the effects of Web er's Law in memory. These models generalise and extend a model of risk sensitive foraging originally proposed by Reboreda & Kacelnik [(1991) Behav. Ecol. 2, 301-308], which yielded qualitative predictions (risk -aversion for amount of food and risk-proneness for delay to food). We now demonstrate how this approach can predict quantitatively the part ial preferences between two alternative options with any mean and vari ance in their outcomes, and the certainty equivalent of an option cons isting of any set of probabilistic outcomes. The approach is also rele vant to the economics and psychology of risk sensitivity because it pr edicts risk aversion for any desirable outcome (such as monetary gains ) and risk seeking for any undesirable gain (such as monetary losses). Our models are process-based rather than purely normative, and are ba sed on linear expected utility as a function of expected outcomes. The y do not account for all observed aspects of risky choice, but their d escriptive performance betters that of existing functional models and requires fewer parameters. (C) 1998 Academic Press.