Sequential Risk Decision Process: Change in the Reference Point and Information Search Mechanism
Date Issued
2014
Date
2014
Author(s)
Lu, Yi-Hsien
Abstract
We design a "Coin Exchange" experiment in which we record the behavior of information search and sequential decision-making under risk to investigate the effect of past information on current decision. Subjects tend to prefer safe choices when they had gone through more stages before reaching the current one. Furthermore, they are inclined to select a risky choice after suffering a loss compared with when they receive a gain. Expected utility theory and some further extensions such as the regret theory and the disappointment theory failed to explain these findings. We made use of the prospect theory to explain our data. When the reference point is path-dependent, we set up a model of how reference point might change to account for observed behaviors. The results suggest our model is better than the others. In addition, the information search pattern of subjects seems efficient, i.e., they stop collecting new information when they have accumulated enough to make the decision for the next step.
Subjects
參考點
風險趨避
損失趨避
資訊搜集
風險決策
Type
thesis
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