Decision making under risk and uncertainty

After last week`s lecture i can understand better the theories of decison making under risk which includes expected value theory, expected utility theory and prospect theory. And also decison making under uncertainty which includes support theory and cumulative prospect theory.

We had to read an article called Priority Heuristic : Making choices without trade-offs written by E. Brandstatter, G. Gigerenzer and R. Hertwig.
At first, i found the article hard to comprehend, but after a good explanation of relevant theories at the lecture i found it less confusing.

In the article the authors identify a number of properties that the priority heuristic should have as a process model and illustrate how they may be tested. The heuristic consists of the following steps: Priority Rule : go through reasons in the order: minimum gain, probability of minimum gain, maximum gain. Stopping Rule: stop examination if the minimum gains differ by 1/10 (or more) of the maximum gain; otherwise, stop examination if probabilities differ by 1/10 (or more) of the probability scale. Decision Rule: choose the gamble with the more attractive gain (probability). The heuristic combines features from three different sources: Its initial focus is on outcomes rather than on probabilities.

The results, along with research, suggest that although the priority heuristic captures some variability in the attention paid to outcomes, it fails to account for major characteristics of the data, particularly the frequent transitions between outcomes and their probabilities.