Risk, ambiguity and quantum decision theory

Details Risk, ambiguity and quantum decision theory Risk, ambiguity and quantum decision theory

2007-11-06

arxiv.org/abs/0711.0886v1

Physics

General Physics

1 figure

Scientific paper

10.1016/j.ins.2011.09.002

In the present article we use the quantum formalism to describe the effects of risk and ambiguity in decision theory. The main idea is that the probabilities in the classic theory of expected utility are estimated probabilities, and thus do not follow the classic laws of probability theory. In particular, we show that it is possible to use consistently the classic expected utility formula, where the probability associated to the events are computed with the equation of quantum interference. Thus we show that the correct utility of a lottery can be simply computed by adding to the classic expected utility a new corrective term, the uncertainty utility, directly connected with the quantum interference term.

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