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Preference cloud theory

modelling imprecise preferences and a new theory for decision under risk

Bayrak, Oben K. (2016). Preference cloud theory. Diss. (sammanfattning/summary) Umeå : Sveriges lantbruksuniv., Acta Universitatis Agriculturae Sueciae, 1652-6880 ; 2016:44
ISBN 978-91-576-8590-2
eISBN 978-91-576-8591-9
[Doctoral thesis]

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This study presents Preference Cloud Theory, a two-step model of decision making under risk. It also includes an experimental study on valuation gap which provides supporting results for the new theory. The new theory provides an explanation for empirically observed anomalies of Expected Utility Theory such as the Allais Paradox, valuation gap, and preference reversals. Central to the theory is the incorporation of preference imprecision, which has support in emerging literature, and challenges to the alternative models for Expected Utility Theory. Preference Cloud Theory assumes that preference imprecision arises because of individuals’ vague understanding of numerical probabilities. The theory combines this concept with the use of the Alpha Model (which builds on Hurwicz’s criterion) and constructs a simple model, helping us to understand various anomalies discovered in the experimental economics literature that standard models could not explain.

Authors/Creators:Bayrak, Oben K.
Title:Preference cloud theory
Subtitle:modelling imprecise preferences and a new theory for decision under risk
Series Name/Journal:Acta Universitatis Agriculturae Sueciae
Year of publishing :2016
Depositing date:19 April 2016
Number of Pages:148
IOben K. Bayrak and Bengt Kriström (2016). Is There a Valuation Gap? The Case of Interval Valuations. Economics Bulletin 36(1), 218–236.
IIOben K. Bayrak and John D. Hey (2015). Preference Cloud Theory: Imprecise Preferences and Preference Reversals. SSRN Scholarly Paper No. ID 2633392. Social Science Research Network, Rochester, NY.
IIIOben K. Bayrak (2015). Note: Imprecise Preferences, Preference Cloud Theory, Multiple Selves and Intrapersonal Planner Approach. SSRN Scholarly Paper No. ID 2669986. Social Science Research Network, Rochester, NY.
IVOben K. Bayrak. Modelling imprecise preferences and a new theory for decision under risk: Preference Cloud Theory.
Place of Publication:Umeå
Publisher:Department of Forest Economics, Swedish University of Agricultural Sciences
ISBN for printed version:978-91-576-8590-2
ISBN for electronic version:978-91-576-8591-9
Publication Type:Doctoral thesis
Full Text Status:Public
Agris subject categories.:E Economics, development, and rural sociology > E73 Consumer economics
Subjects:(A) Swedish standard research categories 2011 > 5 Social Sciences > 502 Economics and Business > Economics
Agrovoc terms:decision making, risk, valuation, economic theories, models, uncertainty, probability analysis, human behaviour
Keywords:decision under risk, preference reveals, valuation gap, Allais Paradox, Willingness to pay and accept disparity, experimental economics, behavioural economics
Permanent URL:
ID Code:13289
Faculty:S - Faculty of Forest Sciences
Department:(S) > Dept. of Forest Economics
Deposited By: PhD Camilla Widmark
Deposited On:20 Apr 2016 08:59
Metadata Last Modified:10 Sep 2020 13:41

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