Decision Makers Facing Uncertainty: Theory versus Evidence

We consider three competing normative theories of how to make choices when facing uncertainty: subjective expected utility, maximin utility and minimax regret. In simple decision problems, we compare how decision makers under each of these theories value safe options, freedom of choice and information. We then use these models to predict answers to questions in the European Values Survey and use these predictions via a latent class analysis to estimate the distribution of these behaviors across Europe. We find a larger proportion of Bayesians in the Northern countries than in Southern countries. The opposite is true for maximin utility behavior. Only a few are consistent with minimax regret behavior.