In recent years the understanding of the cognitive foundations of economic behavior has become increasingly important. This volume contains contributions from such leading scholars as Adam Brandenburger, Michael Bacharach and Patrick Suppes. It will be of great interest to academics and researchers involved in the field of economics and psychology as well as those interested in political economy more generally.

This paper considers a decision-making process under ambiguity in which the decision-maker is supposed to split outcomes between familiar and unfamiliar ones. She is assumed to behave differently with respect to unfamiliar gains, unfamiliar losses and customary (familiar) outcomes. In particular, she is supposed to be pessimistic on gains, optimistic on losses and ambiguity neutral on the familiar outcomes. A generalization of the usual Choquet Integral is formalized when the decision maker holds capacities and probabilities. A characterization of the decision-maker’s (...) behavior is provided for a specific subset of capacities, in which it is shown that the decision-maker underestimates the unfamiliar outcomes while is linear in probabilities on customary ones. (shrink)

We axiomatize, in the multidimensional case, a social evaluation function that can accommodate a natural Pigou–Dalton principle and correlation increasing majorization. This is performed by building upon a simple class of inframodular functions proposed by Müller and Scarsini under risk.