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| Type | Working Paper |
| Scope | Discipline-based scholarship |
| Title | Axiomatization of a Preference for Most Probable Winner |
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| Institution | University of Zurich |
| Series Name | Working paper series / Institute for Empirical Research in Economics |
| Number | No. 230 |
| ISSN | 1424-0459 |
| Date | 2005 |
| Abstract Text | In binary choice between discrete outcome lotteries, an individual may prefer lottery L1 tonlottery L2 when the probability that L1 delivers a better outcome than L2 is higher than thenprobability that L2 delivers a better outcome than L1. Such a preference can be rationalizednby three standard axioms (solvability, convexity and symmetry) and one less standard axiom (a fanning-in). A preference for the most probable winner can be represented by a skewsymmetric bilinear utility function. Such a utility function has the structure of a regret theory when lottery outcomes are perceived as ordinal and the assumption of regret aversion isnreplaced with a preference for a win. The empirical evidence supporting the proposed systemnof axioms is discussed. |
| Official URL | http://www.econ.uzh.ch/wp.html |
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