The aim of this study is to provide a better understanding of utility assessment inconsistencies in the standard normative model of decision making under risk—that is, expected utility theory. Because the origin of these inconsistencies is the fact that a utility function of the form U(p, x) = pu(x) is a poor descriptive model for subjects' choice between lotteries offering gain x with probability p, a more general model—the multiplicative model Lf(p, x) = I), and does not find any evidence of probability distortion (V(p) ^ p, for some p < 1) in the probability range investigated, [.5, .9], This suggests that the observed utility assessment inconsistencies should be imputed to the certainty effect alone.
No takes yet. Share an insight, caveat, or question.
Cohen et al. (1988) studied this question.