RANK-DEPENDENT UTILITY IS A BETTER TERM THAN RANK-DEPENDENT EXPECTED UTILITY Peter Wakker, October 2007 For the theory introduced by Quiggin (1982), the short term rank-dependent utility is preferable to other terms such as the long term rank-dependent expected utility. Quiggin used the long term in his 1993 book, but in 2001 changed preference and right so (see email at bottom of this file). Tversky preferred the short term from the beginning and convinced me. It is very very important that terms be short and tractable. A sentence such as "The advantage of rank-dependent expected utility over expected utility is that rank-dependent expected utility ... " does not work and one rather change subject. The abbreviation RDEU neither works in such conversations. "Expected" can be dropped because "rank-dependent" already alludes to an aggregation taking place, and then "expected" adds too little information to justify its horrible increase in length. (Amos Tversky used this argument to convince me.) Here is the email in which Quiggin announced his change of mind: X-Authentication-Warning: mail.fee.uva.nl: Host IDENT:root@[210.8.10.241] claimed to be cts01.webone.com.au X-Sender: u8402671@pophost.anu.edu.au Date: Fri, 21 Dec 2001 21:01:01 +1100 To: "Peter P. Wakker" From: John Quiggin Subject: merry xmas Hi Peter, this is mainly a note to say Merry Xmas and wish you the best for the coming year. I'll just intrude one note of business which is that I've now decided (belatedly) that rank-dependent utility is the best name for my model. We should talk about this some more some time. I'm not sure how much of my news you have . . . Best John -- Web site http://ecocomm.anu.edu.au/quiggin --------------------------------------------------- John Quiggin, Australian Research Council Senior Fellow John.Quiggin@anu.edu.au Phone +61 2 61254853 (ANU) +61 2 62578992 (home) Fax + 61 2 61255124 (anu) *(Snail mail )* School of Economics Faculty of Economics and Commerce Australian National University ACT 0200 AUSTRALIA ---------------------------------------------------------