Congratulations to CERE Dr Oben Bayrak who successfully defended his thesis Preference Cloud Theory: Modelling Imprecise Preferences and a New Theory for Decision under Risk on May 13th, 2016. The thesis presents the Preference Cloud Theory, a two-step model of decision making under risk. The theory provides an explanation for some empirically observed anomalies of the Expected Utility Theory, such as Allais Paradox, valuation gaps and preference reversals. Preference imprecision that arises because of individuals’ vague understanding of numerical probabilities is a corner stone in the theory. This concept is combined with the use of the so called Alpha model to develop a theory that explains various anomalies discovered in the experimental economics literature that standard models cannot explain.
Full access to Oben’s thesis.