Dual Criteria Decisions

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Dual Criteria Decisions

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dc.contributor.author Andersen, Steffen
dc.contributor.author Harrison, Glenn W.
dc.contributor.author Lau, Morten Igel
dc.contributor.author Rutström, Elisabet E.
dc.date.accessioned 2009-05-28
dc.date.accessioned 2009-05-28T08:02:45Z
dc.date.available 2009-05-28T08:02:45Z
dc.date.issued 2009-05-28T08:02:45Z
dc.identifier.uri http://hdl.handle.net/10398/7798
dc.description.abstract The most popular models of decision making use a single criteria to evaluate projects or lotteries. However, decision makers may actually consider multiple criteria when evaluating projects. We consider a dual criteria model from psychology. This model integrates the familiar tradeoffs between risk and utility that economists traditionally assume, allowance for rank-dependent decision weights, and consideration of income thresholds. We examine the issues involved in full maximum likelihood estimation of the model using observed choice data. We propose a general method for integrating the multiple criteria, using the logic of mixture models, which we believe is attractive from a decision-theoretic and statistical perspective. The model is applied to observed choices from a major natural experiment involving intrinsically dynamic choices over highly skewed outcomes. The evidence points to the clear role that income thresholds play in such decision making, but does not rule out a role for tradeoffs between risk and utility or probability weighting. en_US
dc.format.extent 33 s. en_US
dc.language eng en_US
dc.relation.ispartofseries Working paper;2009-02
dc.title Dual Criteria Decisions en_US
dc.type wp en_US
dc.accessionstatus modt09maj28 nijemo en_US
dc.contributor.corporation Copenhagen Business School. CBS en_US
dc.contributor.department Økonomisk Institut en_US
dc.contributor.departmentshort ECON en_US
dc.contributor.departmentuk Department of Economics en_US
dc.contributor.departmentukshort ECON en_US
dc.idnumber x656597347
dc.publisher.year 2009 en_US


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