Probability Weighting: Decision Weights, Long Shots & Certainty Equivalents
This lesson is part of the course
In this lesson
You compute the inverse-S decision weights w(p), find the certainty equivalents of a long-shot ticket and a near-sure bet and see risk seeking for small chances and risk aversion for large ones.
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Lessons in this course
- Exponential vs Hyperbolic Discounting: β-δ Weights & Preference Reversals Locked
- Present Bias & Saving: a β-δ Saver vs a Commitment Device Locked
- The Value Function: Diminishing Sensitivity, Loss Aversion λ & Mixed Gambles Locked
- Probability Weighting: Decision Weights, Long Shots & Certainty Equivalents Locked
- Framing & Mental Accounting: Segregate Gains, Integrate Losses Locked
- Anchoring Experiment: Group Means, Effect Size d & the Anchoring Index Locked
- Defaults & Nudges: Opt-In vs Opt-Out Uptake, Uplift & a Confidence Interval Locked
- Decoy Effect & Choice Architecture: Share Shifts and a Policy Summary Locked