This paper aims at assessing cultural differences in uncertainty attitude across Europe. We select questions from the European Values Survey (EVS) capturing salient features of uncertain scenarios ("safe versus uncertain", "freedom of choice" and "reduction of uncertainty"), and formalize these questions through simple decision-theoretic problems. We then consider three competing normative models of choice under uncertainty (subjective expected utility (SEU), maximin utility and minimax regret), and analyze how they behave when facing each decision problem. We obtain theoretical predictions and, using the EVS dataset, we test them via latent class analysis to estimate the distribution of these behaviors across EU15. We find a larger proportion of SEU maximizers (Bayesians) in northern countries than in southern countries. The opposite is true for maximin utility behavior. Only a few are consistent with minimax regret behavior.

Decision Makers Facing Uncertainty: Theory versus Evidence / Giordani, Paolo; Karl H., Schlag; Sanne, Zwart. - In: JOURNAL OF ECONOMIC PSYCHOLOGY. - ISSN 0167-4870. - 31:(2010), pp. 659-675. [10.1016/j.joep.2010.04.004]

Decision Makers Facing Uncertainty: Theory versus Evidence

GIORDANI, PAOLO;
2010

Abstract

This paper aims at assessing cultural differences in uncertainty attitude across Europe. We select questions from the European Values Survey (EVS) capturing salient features of uncertain scenarios ("safe versus uncertain", "freedom of choice" and "reduction of uncertainty"), and formalize these questions through simple decision-theoretic problems. We then consider three competing normative models of choice under uncertainty (subjective expected utility (SEU), maximin utility and minimax regret), and analyze how they behave when facing each decision problem. We obtain theoretical predictions and, using the EVS dataset, we test them via latent class analysis to estimate the distribution of these behaviors across EU15. We find a larger proportion of SEU maximizers (Bayesians) in northern countries than in southern countries. The opposite is true for maximin utility behavior. Only a few are consistent with minimax regret behavior.
Uncertainty; maximin; minimax regret; Bayesianism; cross-cultural differences; European Values Survey; latent class analysis.
Decision Makers Facing Uncertainty: Theory versus Evidence / Giordani, Paolo; Karl H., Schlag; Sanne, Zwart. - In: JOURNAL OF ECONOMIC PSYCHOLOGY. - ISSN 0167-4870. - 31:(2010), pp. 659-675. [10.1016/j.joep.2010.04.004]
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11385/7143
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