New study reveals how random expected utility can mimic probability weighting functions.
Random expected utility preferences can mimic probability weighting functions in decision-making. This means that people can make choices based on uncertain outcomes in a way that resembles how they weigh different probabilities. The study shows that for certain simple scenarios, people's expected certainty equivalents can match those predicted by specific probability weighting functions. However, the interpretation of these certainty equivalents can vary depending on the assumptions made about their variability.