A Belief-Based Account of Decision Under Uncertainty
Management Science · 1998 · Volume 44 · Issue 7
Abstract
We develop a belief-based account of decision under uncertainty. This model predicts decisions under uncertainty from (i) judgments of probability, which are assumed to satisfy support theory; and (ii) decisions under risk, which are assumed to satisfy prospect theory. In two experiments, subjects evaluated uncertain prospects and assessed the probability of the respective events. Study 1 involved the 1995 professional basketball playoffs; Study 2 involved the movement of economic indicators in a simulated economy. The results of both studies are consistent with the belief-based account, but violate the partition inequality implied by the classical theory of decision under uncertainty.
Keywords
Decision Making, Risk, Uncertainty, Expected Utility, Prospect Theory, Support Theory, Decision Weights, Judgment, Probability
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