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To see how prospect theory can be applied, consider the decision to buy insurance. Assume the probability of the insured risk is 1%, the potential loss is $1,000 and the premium is $15. If we apply prospect theory, we first need to set a reference point. This could be the current wealth or the worst case (losing $1,000).
The theory of subjective expected utility combines two concepts: first, a personal utility function, and second, a personal probability distribution (usually based on Bayesian probability theory). This theoretical model has been known for its clear and elegant structure and is considered by some researchers to be "the most brilliant axiomatic ...
Theories of political behavior, as an aspect of political science, attempt to quantify and explain the influences that define a person's political views, ideology, and levels of political participation, especially in relation to the role of politicians and their impact on public opinion .
Pages in category "Prospect theory" The following 28 pages are in this category, out of 28 total. This list may not reflect recent changes. ...
The politics-administration dichotomy is an important concept in the field of public administration and shows no signs of going away because it deals with the policy-maker's role as an administrator and the balancing act that is the relationship between politics and administration. [5]
The term is named after the American policy analyst and former senior vice president at Mackinac Center for Public Policy, Joseph Overton, who proposed that the political viability of an idea depends mainly on whether it falls within an acceptability range, rather than on the individual preferences of politicians using the term or concept.
The mythological Judgement of Paris required selecting from three incomparable alternatives (the goddesses shown).. Decision theory or the theory of rational choice is a branch of probability, economics, and analytic philosophy that uses the tools of expected utility and probability to model how individuals would behave rationally under uncertainty.
The main modification to prospect theory is that, as in rank-dependent expected utility theory, cumulative probabilities are transformed, rather than the probabilities themselves. This leads to the aforementioned overweighting of extreme events which occur with small probability, rather than to an overweighting of all small probability events.