Second-best Probability Weighting ∗

  title={Second-best Probability Weighting ∗},
  author={Florian Herold},
Non-linear probability weighting is an integral part of descriptive theories of choice under risk such as prospect theory. But why do these objective errors in information processing exist? Should we try to help individuals overcome their mistake of overweighting small and underweighting large probabilities? In this paper, we argue that probability… CONTINUE READING