Effects of vague probabilities and of vague payoffs on preference: A model comparison analysis

Preference orders over gambles having vague probabilities or vague payoffs were investigated, Risk and worth judgments were also studied in these two vague conditions. A trade-off and a lexicographic model were compared via a new measure of model performance, This measure is defined as the mean proportion of all possible preference orders satisfying dominance, D, that are more distant from model, M, than are subjects' preferences, S. Results showed that both models describe preference data well, Furthermore, the usual aversion to vague probabilities was found, and a similar phenomenon occurred with vague payoffs. Analyses of Risk and worth judgments showed that vague gambles were,evaluated as their nonvague counterparts and indicated that less risk and more worth are preferred.. (C) 1996 Academic Press, Inc.