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We present a theory of choice among lotteries in which the decision maker's attention is drawn to (precisely defined … distinguish it from Prospect Theory, which we test. We also use the model to modify the standard asset pricing framework, and use …
Persistent link: https://www.econbiz.de/10012462269
We present a model of credit cycles arising from diagnostic expectations - a belief formation mechanism based on Kahneman and Tversky's (1972) representativeness heuristic. In this formulation, when forming their beliefs agents overweight future outcomes that have become more likely in light of...
Persistent link: https://www.econbiz.de/10012456409