A measurement of the certainty effect
For the measurement of the certainty effect, an axiomatic model of decision under risk should be developed, capable of retaining as much of the expected utility as possible. The notions of ``certainty preference'' and ``comparative certainty preference'', characterized in terms of the properties of the derived utility representations, may be derived, permitting the generalization of the Arrow-Pratt measure of absolute risk aversion. The axiomatic model of decision under risk thus developed considers both the certainty effect and the equivalence with the expected utility in all other choice problems. Other aspects approached in the study are: the quantitative evaluation system, several axioms and a representation theorem, the behavioural implications of the derived preference functional. The main sections of the study are as follows: Outline of the model; Axiomatic analysis; Characterization of behaviour; Remarks on the related literature. In an Appendix, some proofs of several propositions and theorems are provided.
scientific article; zbMATH DE number 1218785