This article studies insurance demand in a two-period framework in which an individual faces risks in both current and future periods. Models for insurance with and without the presence of endogenous saving are both discussed. In contrast to what most literature suggests, when decisions on...

This paper studies the Bowley solution for a sequential game within the expected utility framework. We assume that the policyholders are expected utility maximizers, and there exists a representative policyholder who faces a fixed loss with given probability and no loss otherwise. This...

Time preference, emotional "shock sensitivity" and "resilience" are shaping an emotional probability weighting function capable to "replicate" gender specific weighting functions. By maximizing emotional expected utility the proposer (P) and the responder (R) in an ultimatum game are choosing...

Use of preference information to infer risk tolerance has increased in recent years as a way to inform benefit-risk evaluations in regulatory and medical decision making. However, a framework for the measurement of tolerance for multiple uncertain outcomes has not been formalized when choices do...

This paper analyzes the root cause of Ellsberg-type choices. This class of problems shares the feature that at the time of the decision, t=m, the decision maker (DM) possesses partial information about the events/propositions of interest: DM knows the objective probabilities of some sub-class...

We introduce an alternative approach to experimental design aimed at collecting data for parametric estimation of the cumulative form of Prospect Theory (PT). Our approach incorporates two fundamental principles: ensuring that all tasks provide valuable information and avoiding redundancy among...

In developing world, the risk behavior of farmers is very crucial as their daily risk and uncertainty decisions affect their livelihood and overall well-being in the long run. Recent studies related to risky choices among poor farmers found varied results in various countries. Present study...

When agents’ information is imperfect and dispersed, existing measures of macroeconomic uncertainty based on the forecast error variance have two distinct drivers: the variance of the economic shock and the variance of the information dispersion. The former driver increases uncertainty and...