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    Levi's Lexicographical Presentation (IMS555)

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    Pzah Hamsani
    This document summarizes a study on Levi's lexicographical test prepared by 8 students. 1) Levi's theory assumes decision makers have permissible probability distributions and utility functions. It is a normative theory based on optimism and bias. 2) Options must pass through three test phases to be chosen. Only those passing the first phase proceed to the second, and only those passing the second to the third. 3) The case study examines Levi's account of preference reversals, arguing it only partially explains inconsistencies in experimental subjects' choices.

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    Levi's Lexicographical Presentation (IMS555)

    Uploaded by

    Pzah Hamsani
    350 views6 pages
    This document summarizes a study on Levi's lexicographical test prepared by 8 students. 1) Levi's theory assumes decision makers have permissible probability distributions and utility functions. It is a normative theory based on optimism and bias. 2) Options must pass through three test phases to be chosen. Only those passing the first phase proceed to the second, and only those passing the second to the third. 3) The case study examines Levi's account of preference reversals, arguing it only partially explains inconsistencies in experimental subjects' choices.

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    This document summarizes a study on Levi's lexicographical test prepared by 8 students. 1) Levi's theory assumes decision makers have permissible probability distributions and utility functions. It is a normative theory based on optimism and bias. 2) Options must pass through three test phases to be chosen. Only those passing the first phase proceed to the second, and only those passing the second to the third. 3) The case study examines Levi's account of preference reversals, arguing it only partially explains inconsistencies in experimental subjects' choices.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    350 views6 pages

    Levi's Lexicographical Presentation (IMS555)

    Uploaded by

    Pzah Hamsani
    This document summarizes a study on Levi's lexicographical test prepared by 8 students. 1) Levi's theory assumes decision makers have permissible probability distributions and utility functions. It is a normative theory based on optimism and bias. 2) Options must pass through three test phases to be chosen. Only those passing the first phase proceed to the second, and only those passing the second to the third. 3) The case study examines Levi's account of preference reversals, arguing it only partially explains inconsistencies in experimental subjects' choices.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 6

    LEVI’S LEXICOGRAPHICAL TEST

    PREPARED BY:
    1) RIDZUAN
    2) NUR ‘AINAA
    3) NUR AMEERA SHAHIRA
    4) NURUL SYAZWANI
    5) SHERIE
    6) SITI FARAH WAHIDAH
    7) SITI FATIMATULZAHARAH
    8) SITI KAFIAH HASIBI
    9) SITI NUR HAFIZAH
    INTRODUCTION
    This theory assumes that decision makers have a permissible
    1 which allowed a set of probability distributions and a
    permissible set of utility functions

    Levi’s theory is normative which means it would be very


    2 rational and the choices or decisions are based on optimism
    and bias (desire)

    Only options that pass through the first test will be submitted
    3 to the second test, and only those that have passed through
    the second test will be submitted to the third phases

    Chosen case study: Levi’s Account of Preference Reversals


    4 written by Erik Angner, University of Pittsburgh (2002)
    E-admissible
    If and only there is some
    permissible probability distribution
    and some permissible utility
    function such that in combination,
    make this option the best among all
    available options

    P-admissible S-admissible
    If and only if it is E-admissible and It must both be P-admissible and
    it is also best with respect to the “security optimal” among the P-
    preservation of E-admissible
    P S admissible alternatives with respect
    options to some permissible utility function
    CASE STUDY: LEVI’S ACCOUNT OF PREFERENCE REVERSALS

    Levi agrees that expected utility

    01 02
    This article argues that Isaac
    theory is descriptively inadequate
    Levi’s account of preference
    but resists drawing such radical
    reversals is only a limited
    conclusions. He aspires to show his
    success
    theory of decision which is a
    generalization of Bayesian decision
    theory

    Bayesian decision theory was “Can Since Levi’s theory is a normative

    03 give account of responses of


    experimental subjects in a
    systematic manner
    04 one, this shows that subjects may
    be perfectly rational and their
    choices are consistent with having
    beliefs and preferences
    CONCLUSION
    • When making decision, one need to find out which alternatives are E-
    admissible

    • If there is only one alternative available, that alternative will be chosen

    • If there are many E-admissible alternatives available, people can use


    some other criterion to find out some ways

    • If they want to choose alternative that maximize security according to


    maximin criterion, or what Levi refers to as a lexicographical maximin
    (leximin) criterion

    • If the worst outcome is better than the worst outcome of other


    alternatives, the first worst outcome will be chosen

    • If the outcomes of both alternatives are the same, one need to give a
    thought on which alternatives to be chosen
    THANK YO
    U

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