This volume contains a selection consisting of the best papers presented at the FUR XII conference, held at LUISS in Roma, Italy, in June 2006, organized by John Hey and Daniela Di Cagno. The objectives of the FUR (Foundations of Utility and Risk theory) conferences have always been to bring together leading academics from Economics, Psychology, Statistics, Operations Research, Finance, Applied Mat- matics, and other disciplines, to address the issues of decision-making from a g- uinely multi-disciplinary point of view. This twelfth conference in the series was no exception. The early FUR conferences - like FUR I (organized by Maurice Allais and Ole Hagen) and FUR III (organized by Bertrand Munier) - initiated the move away from the excessively rigid and descriptively-inadequate modelling of beh- iour under risk and uncertainty that was in vogue in conventional economics at that time. More than twenty years later, things have changed fundamentally, and now - novations arising from the FUR conferences, and manifesting themselves in the new behavioural economics, are readily accepted by the profession. Working with new models of ambiguity, and bounded rationality, for example, behavioural decision making is no longer considered a sign of mere non-standard intellectual diversi?- tion. FUR XII was organised with this new spirit. In the sense that the behavioural concerns initiated by the ?rst FUR conferences are now part of conventional e- nomics, and the design and organisation of FUR XII re?ects this integration, FUR XII represents a key turning point in the FUR conference series.
Whether we like it or not we all feel that the world is uncertain. From choosing a new technology to selecting a job, we rarely know in advance what outcome will result from our decisions. Unfortunately, the standard theory of choice under uncertainty developed in the early forties and fifties turns out to be too rigid to take many tricky issues of choice under uncertainty into account. The good news is that we have now moved away from the early descriptively inadequate modeling of behavior. This book brings the reader into contact with the accomplished progress in individual decision making through the most recent contributions to uncertainty modeling and behavioral decision making. It also introduces the reader into the many subtle issues to be resolved for rational choice under uncertainty.
