BEHAVIORAL MODELS OF DECISION MAKING UNDER RISK AND/OR UNCERTAINTY WITH APPLICATION TO PUBLIC SECTORS

In this paper, some behavioral (or descriptive) models of individual decision making under risk and/or uncertainty are discussed. Firstly, a model to explain the violations of expected utility hypothesis is described. In this model consequence dependent non-additive probabilities are introduced in a measurable value function under risk where probability of occurring each event is known. The effective application of this approach to public sectors is mentioned in modeling risks of extreme events with low probability and high consequence. Next, a measurable value function under uncertainty is also described where basic probability for a set of event is known but probability of occurring each event is not known. Potential applicability to evaluating a global warming problem is mentioned. As a special case of the measurable value function under uncertainty an extended Kahneman-Tversky model of prospect theory under uncertainty (PTU) is described. An application of PTU to evaluating the sense of security provided by nursing care robots is described.