THE ROLE OF THE AMOUNT OF MONEY IN RISK-TAKING
DOI:
https://doi.org/10.12775/CJFA.2017.010Keywords
risk-taking, certainty, amount of money, personal decisionsAbstract
Decisions based on the expected value have two components: the probability and the value or utility that is often expressed in money. Regarding the first element, it can be pointed out that many decisions contain risk concerning the outcomes of the available options, i.e. concerning the probability of the occurrence of an event. Uncertainty refers, in most cases, to this part, but having said that, the second part, the amount of money, still matters in a decision-making situation. Since the research of the effect of the amount can be considered neglected compared to that of probabilities, I focused on the second component: on the role of the amount of money. The aim was to explore to what extent a 300 times difference in the amount affects the choice.References
Allais, M. (1953). Le Comportement de l'Homme Rationnel devant le Risque: Critique des Postulats et Axiomes de l'Ecole Americaine, Econometrica, 21(4). (Oct., 1953), pp. 503–546.
Birnbaum, M. H. (2008). New Paradoxes of Risky Decision Making. Psychological Review, 115(2), April 2008, 463–501. http://dx.doi.org/10.1037/0033-295X.115.2.463.
Hansson, S. O. (2005). Decision Theory A Brief Introduction. Department of Philosophy and the History of Technology, Royal Institute of Technology (KTH) Stockholm, http://web.science.unsw.edu.au/~stevensherwood/120b/Hansson_05.pdf (accessed: 27.05.2017).
Kolnhofer-Derecskei, A., & Nagy, V. (2016). Under Risk. In: Reicher Regina Zsuzsanna (Ed.) FIKUSZ 2016 – Symposium for Young Researchers: Celebration of Hungarian Science 2016: Budapest, 25th november 2016: Proceedings of FIKUSZ 2016.
Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), pp. 263–292.
Kolnhofer-Derecskei, A., & Nagy, V. (2017): Comparing risk definitions given by Hungarian and Belgian Bachelor Students. In: Thinking Together (under publishing) 14 pages.
Luce, R Duncan & Raiffa, H. (1957): Games and Decisions, John Wiley and Sons, Inc.
Neumann, von J., & Morgenstern, O. (1953), Theory of Games and Economic Behavior, Princeton University Press, Fifth printing (third edition).
Downloads
Published
How to Cite
Issue
Section
Stats
Number of views and downloads: 409
Number of citations: 0
