Components of risk in decision making: Probability and variance preferences.

Abstract

Suggests an alternative to the maximization of expected utility model. Using college Ss, a "study was carried out on bets which were constant in expectation but which varied in skewness or variance with the other variable held constant. Replicated pair comparisons permitted measurement of inconsistency of choice behavior, testing stochastic transitivity, construction of the stochastically dominant preference ordering, and an unfolding analysis of these preference orderings." (PsycINFO Database Record (c) 2006 APA, all rights reserved)