Research statement

My research is focused on the theory of individual decisions under risk and uncertainty, with a special emphasis on various expected utility (EU) models, both in terms of descriptive as well as normative perspective.

My research agenda can be summarized in the following way: axioms of Expected Utility Theory define the standard notion of rationality in the context of individual decisions under risk. It has been proved that they are both necessary and sufficient requirement so that the decision maker who obeys them never accepts Dutch-books, i.e. sequences of trades that when accepted lead to a sure loss for him and a sure gain for the bookie who proposes them. There is vast and well-documented evidence that experimental subjects often violate these axioms. Various behavioral models have been proposed that seek to explain this evidence. This is accomplished however at the expense of giving up some of the EU rationality. These largely descriptive models usually ignore the issue of how much rationality is sacrificed in a quest to explain the data.

I am looking for psychologically motivated explanations of this experimental evidence – simple models of behavior that depart minimally from rationality and at the same time exhibit strong predictive power and are easy to use. This approach combines descriptive and normative perspective: a compromise in a lively debate between behavioral economists (who ask “how people behave”) and traditional decision theorists (who ask “how people should behave”). In other words, my goal is to modify the standard EU model a little bit in order to explain some of the EU violations. Ideally, a hierarchy of different behavioral patterns (EU violations) should emerge built according to the minimal degree of rationality departure that is necessary to predict them.