Bibliography
§2.3, p. 311 2nd para, suggests that estimating functions under PT is complex. A similar suggestion is in Edwards (1954, p. 396, next-to-last para)
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| §2.3, p. 311 2nd para, suggests that estimating functions under PT is complex. A similar suggestion is in Edwards (1954, p. 396, next-to-last para).
It similarly writes, on parametric fitting: “confounds the general test of the theory with that of the specific parametric form.” P. 316, §3: that coexistence of gambling and insurance is explained by overweighting of small probabilities. P. 317: “Despite its greater generality, the cumulative functional is unlikely to be accurate in detail. We suspect that decision weights may be sensitive to the formulation of the prospects, as well as to the number, the spacing and the level of outcomes. In particular, there is some evidence to suggest that the curvature of the weighting function is more pronounced when the outcomes are widely spaced (Camerer 1992). The present theory can be generalized to accommodate such effects but it is questionable whether the gain in descriptive validity, achieved by giving up the separability of values and weights, would justify the loss of predictive power and the cost of increased complexity.” P. 317 last para of main text nicely explains that PT is a departure from rationality, and that this need not be chaotic. decreasing ARA/increasing RRA: do not reject constant RRA and, hence, assume power utility utility families parametric: power family; concave utility for gains, convex utility for losses; real incentives/hypothetical choice: §2.4 argues that hypothetical choice gives same results as real choices inverse-S; standard-sequence invariance biseparable utility if restricted to gains or to losses. } Tversky, Amos & Daniel Kahneman (1992) “Advances in Prospect Theory: Cumulative Representation of Uncertainty,” Journal of Risk and Uncertainty 5, 297–323. {% P. 563: if people have a hard time assessing a single definite value for the probability of an event, they are likely to have an even harder time assessing two definite values for its upper and lower probabilities or generating a second-order probability distribution. Last sentence of paper: the question of how to improve their quality through the design of effective elicitation methods and corrective procedures poses a major challenge to theorists and practitioners alike. (Here “their” refers to intuitive judgments of uncertainty) paternalism/Humean-view-of-preference: nice citation for that debate. %} Tversky, Amos & Derek J. Koehler (1994) “Support Theory: A Nonextensional Representation of Subjective Probability,” Psychological Review 101, 547–567. {% measure of similarity %} Tversky, Amos & David H. Krantz (1969) “Similarity of Schematic Faces: A Test of Interdimensional Additivity,” Perception and Psychophysics 5, 124–128. {% standard-sequence invariance; references on preference reversal; p. 382 writes: “Evidently, preference reversals are induced primarily by scale compatibility, not by the differential prominence of attributes that underlies the choice-matching discrepancy.” Then the next sentence says, to my pleasure: “Indeed, there is no obvious reason to suppose that probability is more prominent than money or vice versa.” Slovic, Griffin, & Tversky (1990), p. 22–23, however, write that they have changed their mind and believe that probability is indeed the prominent dimension. P. 383 seems to write: “If different elicitation procedures produce different orderings of options, how can preferences and values be defined? And in what sense do they exist?” %} Tversky, Amos, Shmuel Sattath, & Paul Slovic (1988) “Contingent Weighting in Judgment and Choice,” Psychological Review 95, 371–384. {% About Samuelson’s game, a fifty-fifty lottery for $200 or $100 is done twice. Both if the first gives a win, and if it gives a loss, do people want to take the second. But if they don’t yet know what the first will give they don’t want the second. Seem to show that people satisfy the sure-thing principle if it is transparent. %} Tversky, Amos & Eldar Shafir (1992) “The Disjunction Effect in Choice under Uncertainty,” Psychological Science 3, 305–309. {% Imagine that participants choose between A and B, multidimensional objects. Some percentage chooses A. We now add an object C that is clearly inferior to A, and has no clear relation to B. Then people choose A more often than before. This cannot be reconciled with rational economic revealed-preference principles under the usual ceteris paribus assumptions (such as no change in info about the intrinsic value of A). The authors cite Huber, Payne, & Puto (1982) for having discovered this. %} Tversky, Amos & Itamar Simonson (1993) “Context-Dependent Preferences,” Management Science 39, 1179–1189. {% %} Tversky, Amos, Paul Slovic, & Daniel Kahneman (1990) “The Causes of Preference Reversal,” American Economic Review 80, 204–217. {% A.o., review of preference reversals. %} Tversky, Amos & Richard H. Thaler (1990) “Anomalies: Preference Reversals,” Journal of Economic Perspectives 4 no. 2, 201–211. {% inverse-S; relative curvature; P. 1263 l. -7/-6: “If expected utility is accepted as a standard for rational choice, then s could be interpreted as an index of rationality.” P. 1266: “from expected utility theory. If this theory is taken as the standard of rational behavior, then the more-SA-than relation can be interpreted as an ordering by departure from rationality.” %} Tversky, Amos & Peter P. Wakker (1995) “Risk Attitudes and Decision Weights,” Econometrica 63, 1255–1280. Link to paper A correction {% %} Tversky, Barbara (2000), letter of September 27. {% conservation of influence: tv series; photographer has to choose between lover an career, and chooses for career. She … well, let me avoid spoilers. %} Twilight zone, Season 1, Episode 9, Little boy lost 18 Oct. 1985; {% They measured risk and ambiguity attitudes for gains and losses from N = 135 healthy subjects, selected using flyers at universities, clinics, and senior communities. Note that also for the elderly only healthy subjects are samled. They implemented RIS. Their main purpose is to investigate how these things depend on age. They do a good and clean job (although ambiguity attitude is not modeled very well, being unaware of empirically found likelihood insensitivity; see below), but it is also purely routine. Subjects chose between a sure $5 and either a risky or ambiguous prospect with one nonzero outcome. The risky/ambiguous payments ranged between $125 and $125. Each subject was endowed with $125 at the beginning! (Losses from prior endowment mechanism). Probability levels ranged from 0.13 to 0.75. So, unfortunately for me, the paper gives no very direct insights into insensitivity and small probabilities. Ambiguity was generated by indicating an interval of probabilities (Figure 1). suspicion under ambiguity: there was one fixed ambiguous urn (I guess: for each ambiguity level), and half the times one of the two colors was winning, and half the times the other color. Utility for both gains and losses was power utility. No loss aversion parameter because no mixed prospects. P. 17143: they assumed EU for risk with power utility (CRRA) and then the power as index of risk aversion. For ambiguity they used biseparable utility (although they only refer to maxmin EU of Gilboa & Schmeidler 1989) with w(p) = p A/2, where A is a measure of ambiguity (the length of the probability interval) and an index of ambiguity aversion for gains, and of ambiguity seeking for losses. Given and A, this treats all probabilities p by substracting the same constant, which will not work well empirically given the common finding of insensitivity. Note that their method amounts to using matching probabilities as recommended by Dimmock, Kouwenberg, & Wakker (2015), given that they use EU for risk. Then logistic function and maximum likelihood. Every choice is repeated 4 times, giving good estimates of consistency. Elderly are way more inconsistenty, and violated stochastic dominance more often. Old and young are more risk averse than midlife. Risk averse for gains, risk seeking for losses: p.17146: they find this clearly. ambiguity seeking for losses: they find ambiguity neutrality for losses, and aversion for gains (P. 17145 & 17146). correlation risk & ambiguity attitude: they find positive for gains ( = 0.30) and absent for losses (P. 17146). reflection at individual level for risk: slightly positive correlation between risk aversion for gains and losses (P.17146). reflection at individual level for ambiguity: slightly positive correlation between ambiguitiy aversion for gains and losses (P.17146).. Cognitive measures: numeracy did not correlate with risk or ambiguity aversion. It did correlate negatively with consistency and satisfying stochastic dominance (P. 17146). (cognitive ability related to risk/ambiguity aversion) P. 17144: more violations of dominance under ambiguity than under risk. ambiguity seeking for losses: the following is not directly related to it, but indirectly somewhat. P. 17147: “Our results also make an important point: findings obtained studying preference in the domain of gains should not be immediately generalized to the domain of losses. P. 17146 2nd column l. 5 wrote: “The most commonly used theoretical models of ambiguity assume that the individual ambiguity attitude is the same in the domain of gains and losses.” The authors are unaware of prospect theory for ambiguity, whereas all their findings confirm this theory. %} Tymula, Agnieszka, Lior A. Rosenberg Belmaker, Lital Ruderman, Paul W. Glimcher, & Ifat Levy (2013) “Like Cognitive Function, Decision-Making Across the Life Span Shows Profound Age-Related Changes,” Proceedings of the National Academy of Sciences 110, 17143–17148. {% ambiguity seeking for losses: seem to find it. %} Tymula, Agnieszka, Paul W. Glimcher, Ifat Levy, & Lior A. Rosenberg Belmaker (2012) “Separating Risk and Ambiguity Preferences Across the Lifespan: Novel Findings and Implications for Policy,” Working Paper, New York University. {% Present hypothetical scenarios to students and inspect what the interest of students is in receiving extra probabilistic info, and how much the latter affects decisions. The interest in and effect of probabilistic info is smaller if ethical considerations play a role, and if decisions are one-shot. It is also smaller than usual in naturalistic settings. One explanation may be that people take their own probability estimations and will not pay much attention to the experimenter’s estimates anyhow. %} Tyszka, Tadeusz & Tomasz Zaleskiewicz (2006) “When Does Information about Probability Count in Choices under Risk?,” Risk Analysis 26, 1623–1636. {% Seem to find that people overestimate equity if one of allocations is constant. %} Ubel, Peter A., Jonathan Baron, & David A. Asch (2001) “Preference for Equity as a Framing Effect,” Medical Decision Making 21, 180–189. {% equity-versus-efficiency: nice experimental demonstration of equity. Specialists in medical decision making (N = 73), prospective jurors (N = 568), and medical ethicists (N = 74), were asked: suppose you must choose between a cheap and an expensive method of testing for colon cancer. Suppose the cheap test can be applied to everyone and saves 1000 lives. The expensive test can be given to half of the population only, but saves 1100 lives in total. What do you prefer? The majority preferred the cheap test for equity reasons. %} Ubel, Peter A., Michael L. DeKay, Jonathan Baron, & David A. Asch (1996) “Cost-Effectiveness Analysis in a Setting of Budget Constraints, Is It Equitable?,” New England Journal of Medicine 334, 1174–1177. {% equity-versus-efficiency: find preference for equity even if at the cost of efficiency. %} Ubel, Peter A. & George F. Loewenstein (1996) “Distributing Scarce Livers: The Moral Reasoning of the General Public,” Social Science and Medicin 42, 1049–1055. {% Seems that they take issue with the silly viewpoint of Gold, Siegel, Russell, & Weinstein (1996) that utilities for medical treatments should always be inferred from the general public rather than from patients, and properly argue that there can be no general rule. %} Ubel, Peter A., George F. Loewenstein, & Christopher Jepson (2003) “Whose Quality of Life? A Commentary Exploring Discrepancies between Health State Evaluations of Patients and the General Public,” Quality of Life Research 12, 599–607. {% Paper about the failed Oregon implementation of C/E (cost-effectiveness). Gold et al. (1996) stated a consensus, unjustified I think, that quality of life estimations should be derived from the general public. Thus for the Oregon project lay people were interviewed by telephone with questions such as “What chance of death would you be willing to take in order to try the treatment?” I would find about every judgment more valuable than the telephonic judgments of lay people. The TTO question “How much time would you be willing to give up in order to eliminate the meninggiorna pain and remain in perfect health?” will be even harder to interpret. Subjects cannot imagine how they can assume to have 75 years to live in total. This paper presents these questions to economic students. Problem is that we as experimenters may understand what the question is about, but lay people and also the econ students cannot imagine any scenario where this question could be relevant. Their best guess may be that, hypothetically, they are getting the treatment, and then are asked to voluntarily take some risk of dying, where they will obviously choose risk 0. The authors find negative results for utility measurement and draw negative general conclusions. P. 114 last para of 1st column: “But our study raises questions about whether utility-elicitation methods accurately assign relative values on health outcomes.” But these negative conclusions may only concern the measurements used here. %} Ubel, Peter A., George F. Loewenstein, Dennis Scanlon, & Mark Kamlet (1996) “Individual Utilities Are Inconsistent with Rationing Choices: A Partial Explanation of why Oregon’s Cost-Effectiveness List Failed,” Medical Decision Making 16, 108–116. {% %} Ulam, Stanislaw (1930) “Zur Masstheorie in der Allgemeinen Mengenlehre,” Fundamentà Mathematicae 16, 140–150. {% Seems to have said: "Using a term like nonlinear science is like referring to the bulk of zoology as the study of non-elephant animals.” It seems that the quote can be found in James Gleick (1987) “Chaos: Making a New Science.” Viking Penguin, 1987 and on page 374 in Campbell et al. (1985) “Experimental Mathematics: The Role of Computation in Nonlinear Science", Commun. Assoc. Comput. Mach. 28, 374–384. Another formulation of this quote sometimes found is: “The study of non-linear physics is like the study of non-elephant biology.” %} Ulam, Stanislaw {% %} Ullrich, James R. & Ronald E. Wilson (1993) “A Note on the Exact Number of Two- and Three-Way Tables Satisfying Conjoint Measurement and Additivity Axioms,” Journal of Mathematical Psychology 37, 624–628. {% Find evidence against some explanations of the underweighting of rare events found in the decision-from-experience approach. Seems that, when presenting supposedly random samples to subjects, they in reality gave exactly representative samples (matching samples paradigm), which would comprise some deception (deception). %} Ungemach, Christoph, Nick Chater, & Neil Stewart (2009) “Are Probabilities Overweighted or Underweighted when Rare Outcomes Are Experienced (Rarely)?,” Psychological Science 20, 473–479. {% Fuzzy Wuzy was a bear. But Fuzzy Wuzzy had no hair, So Fuzzy Wuzzy wasn’t fuzzy, Was he? %} Unknown source (1999). {% homebias %} Uppal, Raman & Tan Wang (2003) “Model Misspecification and “Under-Diversification,” Journal of Finance 58, 2465–2486. {% crowding-out: seems to have empirically verified the claim on blood donation by Titmuss (1970. %} Upton, William E. (1973) “Altruism, Attribution, and Intrinsic Motivation in the Recruitment of Blood Donors.” Doctoral Dissertation, Cornell University. {% Discuss a Roe, Busemeyer, & Townsend (2001) model with a model explaining loss aversion by other factors and, thus, in a way, assuming loss aversion away. This paper argues that there is a role for loss aversion still. %} Usher, Marius & James L. McClelland (2004) “Loss Aversion and Inhibition in Dynamical Models of Multialternative Choice,” Psychological Review 111, 759–769. {% DOI: http://dx.doi.org/10.1007/s11127-013-0082-x Shows that trust (e.g. in safety of neighborhood where you live) reduces risk perception also if controlling for objective risks and own experiences. %} Uslaner, Eric M. (2013) “Trust as an Alternative to Risk,” Public Choice 157, 629–639. {% Phrenology is old field of study that thought to localize many things in our brains, such as moral values being located on top of the brains, intellectual properties in front, and so on. The author compares neuro science to phrenology. %} Uttal, William R. (2003) “The New Phrenology. The Limits of Localizing Cognitive Processes in the Brain.” MIT Press, Cambridge MA. {% Interview by Maarten Evenblij: “De concensus over cholesterol gaat uit van achtienduizend euro per voor kwaliteit gecorrigeerd levensjaar, bij taxol kom je op dertigduizend euro en bij een longtransplantatie op tachtigduizend euro. Zulke getallen worden impliciet gebruikt, maar niemand durft hardop criteria te noemen. Er wordt erg ad hoc beslist.” (Translation: the consensus about cholesterol assumes €18,000 per quality-adjusted life year, for taxol you end up with €30,000, and for lung-transplantation at €80,000. Such numbers are used implicitly, and no-one dares to mention criteria alound. The decisions are very ad hoc.) %} Uyl-de Groot, Carin (2003) “Rekenen aan Zinnige Zorg,” Volkskrant of approximately May 2003. {% %} Vallentyne, Peter (1993) “Utilitarianism and Infinite Utility,” Australasian Journal of Philosophy 71, 212–217. {% The constant ratio strategy for the Tradeoff method is described following Table 10: a/b = x/y, without consideration of probabilities. %} van Assen, Marcel A.L.M. (1996) “Eliciting Utilities when Probabilities Are Distorted and Eliciting Decision Weights Independently from Outcome Evaluations,” master’s thesis, Department of Mathematical Psychology, University of Nijmegen, the Netherlands. {% %} van Assen, Marcel A.L.M. (1998) “Effects of Individual Decision Theory Assumptions on Predictions of Cooperation in Social Dilemmas,” Journal of Mathematical Sociology 23, 143–153. {% Tradeoff method: first measures utilities of players by means of the tradeoff method. Then uses these to make predictions in game theory. %} van Assen, Marcel A.L.M. & Chris Snijders (2004) “Effects of Risk Preferences in Social Dilemmas: A Game-Theoretic Analysis and Evidence from Two Experiments.” In Ramzi Suleiman, David V. Budescu, & David Messick (eds.) Contemporary Psychological Research on Social Dilemmas, 38–65, Kluwer, Dordrecht. {% Tradeoff method: first measures utilities of players by means of the tradeoff method. Then uses these to make predictions in game theory, in particular, how much people are willing to play cooperatively in the repeated prisoner’s dilemma. %} van Assen, Marcel A.L.M. & Chris Snijders (2001) “The Effect of Nonlinear Utility on Behavior in Repeated Prisoner’s Dilemmas.” {% free-will/determinism: the author is a masters’ student in neuroscience & cognition. (This explains why the deterministic factors for him are signals in the brain, rather than forces and molecules as a physicist would have it, sets of equations as mathematicians would have it, emotions as psychologists would have it, and so on.) I give a translation into English: Daan Evers and Niels van Milten-Burg worry about the existence of a free will (this newspaper, 15 September), but for no reason. My thesis is that a free will obviously does not exists, but that this does not matter. The idea of a free will results from our consciousness. We are aware that we are driven by certain motives, and we realize that we are acting organisms. But this does not mean that our consciousness (only an object and not a subject) can really influence the things we do and consciously experience. An order for action in our brains arises as a logical consequence of impulses that are already present there, and a coincidental observation of those impulses will not change this system. Even if we see our consciousness as a controlling system that can intervene if something is not going the way we want, then also this reaction is predictable beforehand on the basis of signals in our brains and, thus, our free will can be completely set aside. What this amounts to, is that we will never be able to achieve this setting aside - not without powerful technologies and knowledge of really all variables influencing behavior. This means that there is a hole in what we understand of our own actions, and that hole we fill up with the illusion of a free will. The idea of a free will arises therefore if we do not fully understand why we do something [in causal terms] and then ascribe it to some sort of autonomous inspiration, an order for action coming into existence in our brains in a magical manner. Such an alchemy of brains has often been contested by Dick Swaab, but he too misses something important. That in theory a free will does not exist, does not matter. We will never be able to predict human behavior more precisely on the basis of currents in our brain and knowledge of external factors than we have been able to do for many years using a model for action called “free will.” It is therefore extremely useful to be able to continue to assume a free will, purely because this works better in practice than a cold neurological determinism. One of the many advantages of the belief in a free will is the fact that it gives happiness [utility]. Evers and Van Miltenburg can get themselves an icecream with no reason to worry and can have the pleasurable feeling that they decided entirely by themselves to do so. And this is how it is in fact: certain factors in their body - and more “self” than your own body you will never find - quite like to get that ice cream! However, philosophers desire a concept transpiring more autonomy, and the free will is that concept for them. Excellent, of course, because it makes them happy to have the feeling that in a moment of ultimate freedom (just do something crazy for a change) they could take three scoops of icre cream instead of two. For me it is rather simple: I have no free will. Everything I do, is determined by an interaction of factors within and outside my body. But I do feel that I have a free will: it makes it very easy for me to accept what I do. And it makes me happy to think that I am free “to do what I want.” Look, I know that falling in love consists of currents in the brain and materials in my blood, but this does not make the feeling generate less happinesss. Thus Evers and van Miltenburg can rest assured and continue to order ice creams, and Dick Swaab can continue to scan brains. They should discriminate between research and daily life: belief in free will has no place in neuroscience, but setting it aside does not make life better. We need not pay much attention to the nonexistence of a free will: that only makes us less happy. Therefore consider the lack of a free will not to be a lack of freedom, but consider setting this nonexistence aside as a source of happiness. %} van Baar, Jeroen (2011) “Geloof in Vrije Wil Maakt Gelukkiger” (in Dutch), De Volkskrant, p. 33, 24 September 2011. {% probability communication: Seems to write that statisticians recommend never reporting data using pie charts (as area of probability wheel). Seems that people can’t judge angles well. %} van Belle, Gerald (2002) “Statistical Rules of Thumb.” Wiley, New York. {% %} van Benthem, Johan F.A.K. (1981) “Fundering of Ondermijning?,” Nieuw Archief voor Wiskunde 29, 254–284. {% %} van Boven, Leaf, George Loewenstein, & David Dunning (2005) “The Illusion of Courage in Social Predictions: Underestimating the Impact of Fear of Embarrassment on Other People,” Organizational Behavior and Human Decision Processes 96, 130–141. {% revealed preference: Varian showed that revealed preference cannot be falsified if we only observe some and not all goods. It has often been used against lab tests of revealed preference. This paper shows that Varian’s result does not invalidate lab tests because then assumptions of fixed prices and expenditures there. %} van Bruggen, Paul & Jan Heufer (2017) “Afriat in the Lab,” Journal of Economic Theory 169, 546–550. {% %} van Daal, Jan & Arnold H.Q.M. Merkies (1984) “Aggregation in Economic Research.” Kluwer, Dordrecht. {% restricting representations to subsets: p. 608 discusses global consistency (a kind of separability) that holds over the whole domain, and then local/conditional consistency, which considers the preference conditions only on subdomains. They do not provide results, but mention its interest. Around p. 625: maximization over two-fold product set, so choice options are, say, m by n matrices. Then weak separability w.r.t. both products already implies additive representability and, hence, strong separability. That is an, appealing, consequence of Gorman’s (1968) theorem. The paper gives nice history on it. It was central in economics, where columns indicate commodities, rows indicate individuals at the micro level, and the whole matrix the macro level. Can macro be considered to be an aggregation of micro? Nataf (1948) is an early classic, showing the above result for a 2 2 matrix using differentiability. %} van Daal, Jan & Arnold H.Q.M. Merkies (1988) “The Problem of Aggregation of Individual Economic Relations; Consistency and Representativity in a Historical Perspective.” In Wolfgang Eichhorn (ed.) Measurement in Economics (Theory and Applications of Economic Indices), 607–637, Physica-Verlag, Heidelberg. {% didactical %} van Daele, Alfons (1990) “The Lebesgue Integral without Measure Theory,” American Mathematical Monthly 97, 912–915. {% Brouwer’s idea that every function is continuous. %} van Dalen, Dirk (1988) “Infinitesimals and the Continuity of all Functions,” Nieuw Archief voor Wiskunde 6, 191–202. {% Informele naam Harry wordt ook wel gebruikt. %} van Dalen, Hendrik P. (1999) “The Golden Age of Nobel Economists,” American Economist 43, 19–35. {% %} van Damme, Eric (1983) “Refinements of the Nash Equilibrium Concept.” Springer, Berlin. {% normal/extensive form %} van Damme, Eric (1987) “Equilibria in Noncooperative Games,” In Hans J.M. Peters & Koos J. Vrieze (eds.) Surveys of Game Theory and Related Topics, 1–37, CWI Tract 39, Centre for Mathematics and Computer Science, Amsterdam. {% normal/extensive form %} van Damme, Eric (1987) “Stability and Perfection of Nash Equilibrium.” Springer, Berlin. {% Introduced the burning-money idea in the battle of the sexes. %} van Damme, Eric (1989) “Stable Equilibria and Forward Induction,” Journal of Economic Theory 48, 476–496. {% dynamic consistency %} van Damme, Eric (1992) “Refinements of Nash Equilibrium.” In Jean-Jacques Laffont (ed.) Advances in Economic Theory I, 32–75, Cambridge University Press, Cambridge. {% %} van Damme, Eric (1993) “Evolutionary Game Theory,” Center for Economic Research, University of Tilburg. {% Shows that probability weighting becomes more linear under repeated decisions where subjects can learn and get good incentives. %} van de Kuilen, Gijs (2009) “Subjective Probability Weighting and the Discovered Preference Hypothesis,” Theory and Decision 67, 1–22. {% %} van de Kuilen, Gijs & Peter P. Wakker (2006) “Learning in the Allais Paradox,” Journal of Risk and Uncertainty 33, 155–164. Link to paper
van de Kuilen, Gijs & Peter P. Wakker (2011) “The Midweight Method to Measure Attitudes toward Risk and Ambiguity,” Management Science 57, 582–598. Link to paper
van de Stadt, Huib, Gerrit Antonides, & Bernard M.S. van Praag (1984) “Empirical Testing of the Expected Utility Model,” Journal of Economic Psychology 5, 17–29. {% DOI: http://dx.doi.org/10.1177/0272989X13493145 Nice clean application of decision analysis. “Clean” does not mean that one can do any useful applications without getting dirty hands. It is expected utility in full glory, with probability estimates, utility measurements, decision trees, and sophisticated software to analyze. No probabilities are exactly known, of course, so we can call it ambiguity. The authors handle uncertainties about probabilities, like uncertainties about all other variables (probability is not special in this regard!), by using sensitivity analyses, univariate that is. I think that they are lucky in not knowing modern ambiguity theories … They consider undescended testis (UDT) with baby-boys, mean that a testis is present but did not descend enough and did not make it to the scrotum; prevalence 1%. Question is whether to operate, and if so when (because often there is spontaneous cure, being in about 80% after a year). They find that operation is good, but best done only after 9 months. Pro of operation is cosmetic (keeping scrotum symmetric) and bigger fertility, but con is operation-complication risks (p. 912 end of 1st column). The result is highly sensitive to the subjective quality of life of asymmetric scrotum (p. 912 l. -5) and, hence, the authors argue in several places that the patient, or probably his parents, should assess that. P. 917 last para explains that the medical profession did not want this, and one can read between the lines that the authors do not agree (“clinically counterintuitive”). They state their alternative view on p. 916 4th para and in the conclusion (p. 918) 1st para. They measure probabilities from the literature and from expert judgments, and utility through introspective VAS scores transformed into decision-utilities based on Stiggelbout et al. (1996) (p. 911 & 916). Consider 0% and 3% discounting. P. 911 Table 3 gives quality-of-life estimates for no paternity, having scar, dying, and so on. These were measured from the general public (so not from patients or through doctors), with 41 complete questionnaires used (p. 911). P. 916 para -3: that costs are too low to be very relevant here, suggesting a price of €20,000 to €40,000 for a QALY. %} van den Akker–van Marle, M. Elske, Mascha Kamphuis, Helma B. M. van Gameren–Oosterom, Frank H. Pierik, Job Kievit, & NST Expert Group (2013) “Management of Undescended Testis: A Decision Analysis,” Medical Decision Making 33, 906–919. {% %} van den Berg, Bernard, Han Bleichrodt, & Louis Eeckhoudt (2005) “The Economic Value of Informal Care: A Study of Informal Caregivers' and Patients' Willingness to Pay and Willingness to Accept for Informal Care,” Health Economics 14, 363–376. {% %} van den Berg, Bernard & Ada Ferrer-i-Carbonell (2007) “Monetary Valuation of Informal Care: The Well-Being Valuation Method,” Health Economics 16, 1227–1244. {% foundations of probability; foundations of quantum mechanics: they criticize Accardi. %} van den Berg, Hans, Dick Hoekzema, & Hans Radder (1990) “Accardi on Quantum Theory and the “Fifth Axiom” of Probability,” Philosophy of Science 57, 149–157. {% %} Van den Bos, Kees, Riël Vermunt, & Henk A.M. Wilke (1997) “Procedural and Distributive Justice: What is Fair Depends More on What Comes First than on What Comes Next,” Journal of Personality and Social Psychology 72, 95–104. {% Total utility theory: used EQ-5D questionnaire to measure well-being under two treatments. Used the time-integrated results in C/E (cost-effectiveness) analysis. %} van den Hout, Wilbert B., Yvette M. van der Linden, Elsbeth Steenland, Ruud G.J. Wiggenraad, Job Kievit, Hanneke de Haes, & Jan Willem H. Leer (2003) “Single- versus Multiple-Fraction Radiotherapy in Patients with Painful Bone Metastases: Cost-Utility Analysis Based on a Randomized Trial,” Journal of the National Cancer Institute 95, 222–229. {% Paper considers the case where agents do not know the probabilities but must estimate them. It implies that an agent choosing the action with perceived best chance to bring success, is likely to choose an action where he overestimates the chance of success, similar to the winner’s curse. This provides an alternative explanation of overoptimism, attributing success to own actions but failure to external factors, and Langer’s illusion of control. Nice! It gives many references to the literature on the mentioned biases. %} van den Steen, Eric (2004) “Rational Overoptimism (and Other Biases),” American Economic Review 94, 1141–1151. {% time preference; many refs. %} van der Pol, Marjon & John Cairns (2002) “A comparison of the Discounted Utility Model and Hyperbolic Discounting Models in the Case of Social and Private Intertemporal Preferences for Health,” Journal of Economic Behavior and Organization 49, 79–96. {% time preference; Compare open and closed questions to measure discounting. Closed questions give much lower rates of time preference. %} van der Pol, Marjon & John Cairns (2008) “Comparison of Two Methods of Eliciting Time Preference for Future Health States,” Social Science and Medicine 67, 883–889. {% N = 203; test stationarity by asking matching questions. Details of stimuli: they describe illness to subjects, and then ask: how many days ill in X+2 years is equivalent to you to being ill for 30 days starting in X years? So a matching question. Do this for X=0 and some bigger Xs. They find decreasing impatience throughout, not only at present. This falsifies not only constant discounting but also quasi-hyperbolic discounting. This need not violate generalized hyperbolic discounting of Loewenstein & Prelec (1992) although they, somewhat deviating from their title, do not test axioms of that theory and do only what I described above. Similar tests of stationarity have often been done before, and they cite several, to which I would like to add Bleichrodt, Rohde, & Wakker (2009 GEB). They do cite the close Bleichrodt & Johannesson (2001). They claim novelty in the combination of doing it for health rather than money and not being biased by subadditivity and similarity biases. The former claim is based on nothing but the fact that the delay between outcomes is kept constant and that the matching concerns the outcomes (p. 775 2nd last sentence above §4.1 & p. 779 l. 2-5). The latter claim (fewer “similarity” biases) is based on nothing but the fact that they use matching questions, which they claim have fewer biases and then also fewer biases based on similarity (p. 775 last sentence above §4.1 & p. 779 l. 2-5). Most people think that matching questions have more, and not fewer, biases than binary choices today (Bostic et al., 1990; Fischer et al. 1999; Noussair, Robbin, & Ruffieux 2004). DC = stationarity: p. 771 l. 6-7, & l. -11/-9, and most clearly following Eq. 1. Nice English: delay of nearest outcome versus delay between outcomes. %} van der Pol, Marjon & John Cairns (2011) “Descriptive Validity of Alternative Intertemporal Models for Health Outcomes: An Axiomatic Test,” Health Economics 20, 770–782. {% %} van der Pol, Marjon & Larissa Roux (2005) “Time Preference Bias in Time Trade-Off,” European Journal of Health Economics 6, 107–111. {% Investigate utility of life duration of mothers with children, and show that years needed to raise children receive considerably bigger utility than the years after, in deviation from people without children. %} van der Pol, Marjon & Alan Shiell (2007) “Extrinsic Goals and Time Tradeoff,” Medical Decision Making 27, 406–413. {% Get info on individuals from data of whole sample, maybe à la Conte, Hey, & Moffat. %} van Dijk, Bram & Richard Paap (2008) “Explaining Individual Response Using Aggregated Data,” Journal of Econometrics 146, 1–9. {% %} van Doorslaer, Eddy K.A., Adam Wagstaff, Han Bleichrodt et al. (1997) “Income-Related Inequalities in Health: Some International Comparisons,” Journal of Health Economics 16, 93–112. {% nonlinearity in probabilities %} van der Meer, H.C. (1963) “Decision-Making: The Influence of Probability Preference, Variance Preference and Expected Value on Strategy in Gambling,” Acta Psychologica 21, 231–259. {% %} van der Sar, Nico L., Bernard M.S. van Praag, & Steven Dubnoff (1988) “Evaluation Questions and Income Utility.” In Bertrand R. Munier (ed.) Risk, Decision and Rationality, 77–96, Reidel, Dordrecht. {% ISBN: 9789023254485 %} van der Veen, Gerrita, Arne Maas, Anne-Marie Delfgaauw, & Han Gerrits (2015) “Social Media? Social Business! De Groei naar Sociale Volwassenheid.” Koninklijke van Gorcum, Assen, the Netherlands. {% Could serve as simple decision-theoretic example for teaching. %} van Dijk, Merel & Ewoud Steyerberg (2005) “A Decision-Analytic Approach for Defining Prognosis Groups in Oncology: A Case Study for Patients with Testicular Cancer,” {% %} van Dolder, Dennie & Martijn J. van den Assem (2018) “The Wisdom of the Inner Crowd in Three Large Natural Experiments,” Nature Human Behaviour 2, 21–26. {% conservation of influence; on conscious will being merely “an illusion created by the brain.” Criticizes the controversial “Libet-experiments.” %} van Duijn, Marc & Sacha Bem (2005) “On the Alleged Illusion of Conscious Will,” Philosophical Psychology 18, 699–714. {% %} van Everdingen, Yvonne M. & W. Fred van Raaij (1998) “The Dutch People and the Euro: A Structural Equations Analysis Relating National Identity and Economic Expectations to Attitude towards the Euro,” Journal of Economic Psychology 19, 721–740. {% Principle of Complete Ignorance: seems to discuss this view that events that happen or not, cannot be assigned probabilities. %} van Fraassen, Bas C. 1980, “A Temporal Framework for Conditionals and Chance,” Philosophical Review 89, 91–108. Reprinted in William L. Harper, Robert Stalnaker, & Glen Pearce (1981, eds.) Ifs, Conditionals, Beliefs, Decision, Chance, and Time, 323–340, Reidel, Dordrecht. {% cognitive ability related to risk/ambiguity aversion: may be %} van Gelder, Jean-Louis, Reinout E. de Vries, & Joop van der Pligt (2009) “Evaluating A Dual-Process Model of Risk: Affect and Cognition as Determinants of Risky Choice,” Journal of Behavioral Decision Making 22, 45–61. {% Discussing the axioms of Cox (1946), and many follow-up references. Also discusses Halpern’s argument that Cox’s theorem need not hold on finite domains. %} van Horn, Kevin S. (2003) “Structing a Logic of Plausible Inference: A Guide to Cox’s Theorem,” International Journal of Approximate Reasoning 34, 3–24. {% Use RDU. %} Van Houtven George, Reed F. Johnson, Vikram Kilambi, A. Bret Hauber (2011) “Eliciting Benefit-Risk Preferences and Probability-Weighted Utility Using Choice-Format Conjoint Analysis,” Medical Decision Making 31, 469–480. {% game theory can/cannot be seen as decision under uncertainty: %} van Huyck, John B., Raymond C. Battalio, & Richard O. Beil (1991) “Strategic Uncertainty, Equilibrium Selection, and Coordination Failure in Average Opinion Games,” Quarterly Journal of Economics 106, 885–910. {% free-will/determinism: many people have argued that in a deterministic world there can be no free will. Seems that this author funnily reverses the argument and produces what is called the follback argument: if there is chance, probability, in the world, then this is what it is: chance and probability. That cannot be free will. For example, if God repeats history 10 times and 7 times you lie but three times you tell the truth, then it is probability and not your free will. Others, including Buchak (2013), have criticized this view arguing that free will can be a form of indeterminism different than chance/probability. %} van Inwagen, Peter (2000) “Free Will Remains a Mystery,” Philosophical Perspectives 14, 1–20. {% %} van Lambalgen, Michiel (1990) “The Axiomatization of Randomness,” Journal of Symbolic Logic 55, 1143–1167. {% probability elicitation; a thorough study of this elicitation technique with a thorough discussion of the literature. Hence, it can serve as a: survey on belief measurement. %} van Lenthe, Jelle (1993) “ELI: An Interactive Elicitation Technique for Subjective Probability Distributions,” Organizational Behavior and Human Decision Processes 55, 379–413. {% ordering of subsets %} van Lier, L. (1989) “A Simple Sufficient Condition for the Unique Representability of a Finite Qualitative Probability by a Probability Measure,” Journal of Mathematical Psychology 33, 91–98. {% Have subjects (mostly students) answer certainty equivalent questions and speak aloud. Record and analyze these data to find the location of the reference point. Find that planned goals influence the reference point. The authors argue that certainty equivalents (CE’s) are perceived differently than found and/or claimed before, for instance by Bleichrodt, Pinto, & Wakker (2001). P. 344: “Oue findings argue that the CE life-year gamble is very likely not perceived as an all gains gamble, as has been suggested by Bleichrodt and others.” However, Bleichrodt (& Pinto & Wakker, 2001) argued so for CE’s measured through matching. When matching, then no sure outcome is available to serve as an easy reference point and this is crucial in the argument. Van Osch et al. did not use matching, but derived CE’s from observed choices through bisection (p. 340 2nd para). Thus, subjects could focus on a sure outcome in every choice and take that as reference point. This was indeed found (p. 344: “most attention was paid to the offered CE. … Through the use of the chioce-bracketing procedure, we may have induced a changing reference point in the way one introduces a change in the reference point by offering respondents a money amount to start with in money gambles.”). They write on the difference between matching and choice bracketing on p 345: “A further important point is that the findings are applicable only to the choice-bracketing method. If utilities had been derived using the matching method, these findings might have been different.” Thus, their finding does not contradict Bleichrodt et al., contrary to what they write, but it agrees with Bleichrodt et al.. In the equivalence y ~ x0.5z, take (y-x)/(z-x) (PM, the proportional match) as index of risk aversion. utility families parametric: use a logistic family U(t) = a/(1+(b/t)c), which is convex below the inflection point t* = b((c1)/(c+1))1/c, and concave above. Use this family to fit the data. Where the inflection point of this fitted curve ends up, that is where they also assume a reference point to be. %} van Osch, Sylvie M.C., Wilbert B. van den Hout, & Anne M. Stiggelbout (2006) “Exploring the Reference Point in Prospect Theory: Gambles for Length of Life,” Medical Decision Making 26, 338–346. {% Used speak-aloud interviews in standard gamble choices to determine what reference points subjects take. The certain outcome was mostly taken as reference point, and the standard gamble was thus taken as a mixed prospect. Subjects mostly focus on the lowest outcome of the prospect. They also find scale compatibility confirmed although its effect on SG measurements is not clear. %} van Osch, Sylvie M.C. & Anne M. Stiggelbout (2008) “The Construction of Standard Gamble Utilities,” Health Economics 17, 31–40. {% Use correction procedures as recommended by Bleichrodt, Pinto, & Wakker (2002). The results agree with common intuitions on SG (standard gamble) scores. They are also related to TTO (Time TradeOff) measurements, and suggest that the latter, though less high than SG, may still be too high on average. %} van Osch, Sylvie M.C., Peter P. Wakker, Wilbert B. van den Hout, & Anne M. Stiggelbout (2004) “Correcting Biases in Standard Gamble and Time Tradeoff Utilities,” Medical Decision Making 24, 511–517. Link to paper
van Osselaer, Stijn M.J., Joseph W. Alba, & Puneet Manchanda (2004) “Irrelevant Information and Mediated Intertemporal Choice,” Journal of Consumer Psychology 14, 257–270. {% Individual welfare function = utility function of income; risky utility u = strength of preference v (or other riskless cardinal utility, often called value): Van Praag argues that risky utility u = strength of preference v (or other riskless cardinal utility, often called value) in §5.4. concave utility for gains, convex utility for losses: through lognormal utility function: U(y) = F(ln(y)) where F is the distribution function of the normal distribution; utility families parametric. %} van Praag, Bernard M.S. (1968) “Individual Welfare Functions and Consumer Behavior.” North-Holland, Amsterdam, 1968. {% %} van Praag, Bernard M.S. (1975) “Utility, Welfare and Probability: An Unorthodox Economist’s View.” In Dirk Wendt & Charles A.J. Vlek (eds.) Utility, Probability, and Human Decision Making, 279–295, Reidel, Dordrecht. {% %} van Praag, Bernard M.S. (1976) “The Individual Welfare Function of Income and Its Offspring” In Jan S. Cramer, Arnold Heertje, & Paul E. Venekamp (eds.) Relevance and Precision. From Quantitative Analysis to Economic Policy. Essays in Honour of Pieter de Wolff, 279–295, Reidel, Dordrecht. {% %} van Praag, Bernard M.S. (1991) “Ordinal and Cardinal Utility: An Integration of the Two Dimensions of the Welfare Concept,” Journal of Econometrics 50, 69–89. {% %} van Praag, Bernard M.S. & Ada Ferrer-i-Carbonell (2004) “Happiness Quantified.” Oxford University Press, Oxford. {% %} van Praag, Bernard M.S., Paul Frijters, & Ada Ferrer-i-Carbonell (2003) “The Anatomy of Subjective Well-Being,” Journal of Economic Behavior and Organization 51, 29–49. {% %} van Praag, Bernard M.S. & Arie Kapteyn (1994) “How Sensible Is the Leyden Individual Welfare Function of Income? A Reply,” European Economic Review 38, 1817–1825. {% %} van Rooij, Maarten, Annamaria Lusardi, & Rob Alessie (2011) “Financial Literacy and Stock Market Participation,” Journal of Financial Economics 101, 449–472. {% For everything about continuity, differentiability, and the like about real functions that you ever believed to be true, you can find a counterexample here. Statement 4.5 : Every monotonic function is almost everywhere differentiable. %} Van Rooij, Arnoud C.M. & Wilhelmus H. Schikhof (1982) “A Second Course on Real Functions.” Cambridge University Press, Cambridge, UK. {% %} van Soest, Arthur, Marcel Das, & Xiaodong Gong (2005) “A Structural Labour Supply Model with Flexible Preferences,” Journal of Econometrics 107, 345–374. {% Philosophical discussions on whether nature should be taken as discrete or continuum. %} van Strien, Marij (2015) “Continuity in Nature and in Mathematics: Boltzmann and Poincaré,” Synthese 192, 3275–3295. {% %} van Veelen, Matthijs & Roy van der Weide (2008) “A Note on Different Approaches to Index Theory,” American Economic Review 98, 1722–1730. {% %} van Wijck, Esther E.E., Johanna L. Bosch, & Maria G.M. Hunink (1998) “The Reliability of Time Trade-off Values and Standard-Gamble Utilities Assessed in Telephone Interviews versus Face-to-Face Interviews,” Medical Decision Making 18, 400–405. {% %} van Winden, Frans (2001) “Emotional Hazard Exemplified by Taxation-Induced Anger,” Kyklos 54, 491–506. {% %} van Winden, Frans & Ronald Bosman (2005) “Global Risk, Investment, and Emotions,” {% Subjects had to make investment decisions with their own money, so they could really lose (it was real incentives). They study the effect of the timing of the resolution of uncertainty, and of emotions on it. Timing has an effect in one treatment, entailing violations of EU and PT. The paper compares with the impressive Wu (1999, Theory and Decision). %} van Winden, Frans, Michal Krawczyk, & Astrid Hopfensitz (2011) “Investment, Resolution of Risk, and the Role of Affect,” Journal of Economic Psychology 32, 918–939. {% small worlds; Nice sentence: “It also illustrates the importance of modeling the source of violations of consistency conditions, rather than simply weakening axioms on preferences.” %} van Zandt, Timothy (1996) “Hidden Information Acquisition and Static Choice,” Theory and Decision 40, 235–247. {% Seems to show that subjects like to answer truthfully, and not lie, also if no incentive. %} Vanberg, Christophe (2008) “Why Do People Keep Their Promises? An Experimental Test of Two Explanations,” Econometrica 76, 1467–1480. {% %} Varey, Carol A. & Daniel Kahneman (1992) “Experiences Extended across Time: Evaluation of Moments and Episodes,” Journal of Behavioral Decision Making 5, 169–186. {% %} Varey, Carol A., Barbara A. Mellers, & Michael H. Birnbaum (1990) “Judgments of Proportions,” Journal of Experimental Psychology: Human Perception and Performance 16, 613–625. {% %} Varey, Carol A. & Daniel Kahneman (1992) “Experiences Extended across Time: Evaluation of Moments and Episodes,” Journal of Behavioral Decision Making 5, 169–185.One {% Popularizes Afriat’s revealed preference theorem and uses Theorem 1 by Richter (1966). Main difference is that Richter considers completely general choice sets, for completely general objects, and not just choices from demand sets as in consumer theory. Another difference is that Richter wants all best elements to be in the choice set (where the idea is that then one is selected randomly) whereas Varian assumes that only one of the best is in the choice set; so, he gives the result from the final selection. Gives necessary and sufficient conditions for revaled preference to maximize a weak order and utility function. First, p. 946 gives Afriat’s result in a more accessible form than Afriat did. Next it gives some variations, where the generalized axiom of revealed preference (GARP; Richter, 1966, calls it congruency) in Fact 1 (p. 948) is most appealing. P. 947 announces: “there is an equivalent formulation of condition (2) which is quite easy to test. In addition this equivalent formulation is much more closely related to the traditional literature on the revealed preference approach to demand theory or Samuelson [24], Houthakker [12], Richter [21], and others.” Footnote 4 says that Richter has several variations. Richer allows for any data set, finite or infinite. Richter (1966 Theorem 1) showed in full generality that GARP (“congruency”) is equivalent to maximizing a weak order. Only difference, as explained before, is that Richter assumes a multi-element choice set. Varian considers consumer theory and one-point demand functions, but allowing for other commodity bundles to be equivalent to the one demanded. And he assumes non-satiation. P. 946 gives Afriat’s theorem with condition (2) “cyclical consistency” a version of GARP adapted to the context here. Given that the essential domain of chosen xj’s is assumed finite, any ordinal representing function can be turned into a concave function: take the transitive extension of revealed preference over the xi’s, and make it complete over the xi’s. Give a utility value to the best indifference class, and somewhat lower to the 2nd best. Then give the 3rd best an extremely much lower value. Next, give the 4th best a yet way more extremely lower value. And so on, with each new utility difference way bigger than the ones before. This way Condition (3) can always get satisfied, with the lambda’s all equal to 1 if one wants. Given that utility is ordinal, the interpretation of the lambda’s as marginal utility (p. 946 l. -10) is not meaningful. %} Varian, Hal R. (1982) “The Nonparametric Approach to Demand Analysis,” Econometrica 50, 945–973. {% For consumer theory model, with budget sets and prices, gives a necessary and sufficient condition in terms of “there exist constants such that the inequality … holds” for additive separability with concave additive value functions. Wakker (1986; in Daboni, Montesano, & Lines) gives a necessary and sufficient condition for binary preference. I learned about Varian’s paper only in January 2008. %} Varian, Hal R. (1983) “Nonparametric Tests of Consumer Behavior,” Review of Economic Studies 50, 99–110. {% %} Varian, Hal R. (1987) “The Arbitrage Principle in Financial Economics,” Journal of Economic Perspectives 1 no. 2, 55–72. {% Arrow-Pratt risk aversion %} Varian, Hal R. (1988) “Estimating Risk Aversion from Arrow-Debreu Portfolio Choice,” Econometrica 56, 973–979. {% risky utility u = transform of strength of preference v, latter doesn’t exist: p. 57–58: argues against cardinal utility through stength of preference 7th edn. of 2006 seems to discuss the assumption of total wealth on p. 555. %} Varian, Hal R. (1993) “Intermediate Microeconomics.” Norton, New York. {% common knowledge %} Vassilakis, Spyros & Shmuel Zamir (1993) “Common Belief and Common Knowledge,” Journal of Mathematical Economics 22, 495–505. {% %} Veblen, Thorstein (1898) “Why Is Economics not an Evolutionary Science?,” in The Place of Science in Modern Civilization, and Other Essays. Reprinted in Max Lerner (ed., 1948) The Portable Veblen, Viking Press, New York. Seems to also have been reprinted as Veblen (1909) Journal of Political Economy 17. {% Most of this paper I found not so interesting, being negative on the researcher Mr. Clark, cardinal utility saying nothing about the movements of markets or institutions. But there are some nice citations on economics being on living beings and teleology. Here are citations (italics added). The italicized parts reflect essentials of living beings that can exert influence by, for instance, interested discrimination (=observation), to make decision theory and economics different than natural sciences. conservation of influence: the theory is confined to the ground of sufficient reason instead of proceeding on the ground of efficient cause ... The immediate consequence is that the resulting economic theory is of a teleological character ... instead of being drawn in terms of cause and effect. The relation sought by this theory among the facts with which it is occupied is the control exercised by future (apprehended) events over present conduct. Current phenomena are dealt with as conditioned by their future consequences; and in strict marginal-utility theory they can be dealt with only in respect of their control of the present by consideration of the future. Such a (logical) relation of control or guidance between the future and the present of course involves an exercise of intelligence, a taking thought, and hence an intelligent agent through whose discriminating forethought the apprehended future may affect the current course of events; unless, indeed, one were to admit something in the way of a providential elements, the relation of sufficient reason runs by way of the interested discrimination, the forethought, of an agent who takes thought of the future and guides his present activity by regard for this future. The relation of sufficient reason runs only from the (apprehended) future into the present, and it is solely of an intellectual, subjective, personal, teleological character and force; while the relation of cause and effect runs only in the contrary direction, and it is solely of an objective, impersonal materialistic character and force. The modern scheme of knowledge, on the whole, rests for its definitive ground, on the relation of cause and effect; the relation of sufficient reason being admitted only provisionally and as a proximate factor in the analysis, always with the unambiguous reservation that the analysis must ultimately come to rest in terms of cause and effect. The merits of this scientific animus, of course, do not concern the present argument. Now, it happens that the relation of sufficient reason enters very substantially into human conduct. It is this element of discriminating forethought that distinguishes human conduct from brute behavior. And since the economist's subject of inquiry is this human conduct, that relation necessarily comes in for a large share of his attention in any theoretical formulation of economic phenomena, whether hedonistic or otherwise. But while modern science at large has made the causal relation the sole ultimate ground of theoretical formulation; and while the other sciences that deal with human life admit the relation of sufficient reason as a proximate, supplementary, or intermediate ground, subsidiary, and subservient to the argument from cause and effect; [after a marvelous beginning of the sentence, aggression takes over and nonsense follows] economics has had the misfortune -- as seen from the scientific point of view -- to let the former supplant the latter. It is, of course, true that human conduct is distinguished from other natural phenomena by the human faculty for taking thought, and any science that has to do with human conduct must face the patent fact that the details of such conduct consequently fall into the teleological form; but it is the peculiarity of the hedonistic economics that by force of its postulated its attention is confined to this teleological bearing of conduct alone. It deals with this conduct only in so far as it may be construed in rationalistic, teleological terms of calculation and choice. But it is at the same time no less true that human conduct, economic or otherwise, is subject to the sequence of cause and effect, by force of such elements as habituation and conventional requirements. But facts of this order, which are to modern science of graver interest than the teleological details of conduct, necessarily fall outside the attention of the hedonistic economist, because they cannot be construed in terms of sufficient reason, such as his postulates demand, or be fitted into a scheme of teleological doctrines. %} Veblen, Thorstein (1909) “The Limitations of Marginal Utility,” Journal of Political Economy 17, 620–636. {% %} Veenhoven, Ruut (1995) “Is Happiness Relative?,” Social Indicators Research 24, 1–34. {% %} Veenhoven, Ruut (1995) “The Cross-National Pattern of Happiness: Test of Predictions Implied in Three Theories of Happiness,” Social Indicators Research 34, 33–68. {% Discusses, for instance, Brouwer's theorem that every function is continuous. %} Veldman, Wim (2001) “Bijna de Waaier,” NAW 5, 330–339. {% Use introspective satisfaction measurements for German socio-economic panel of 16,000 individuals. Take income of reference group as reference point. Find concavity for gains and, surprisingly, even more concavity for losses. Also find loss aversion. Download 7.23 Mb. Share with your friends:
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