Within the expected-utility framework, the only explanation for risk aversion is that the utility function for wealth is concave: A person has lower marginal utility for additional wealth when she is wealthy than when she is poor. This paper provides a theorem showing that expected-utility...

JEL#: A12, A13, B49, C70, C91, D63<BR> Keywords: difference aversion, fairness, inequality aversion, maximin criterion, non-ultimatum games, reciprocal fairness, social preferences<BR> Departures from pure self interest in economic experiments have recently inspired models of "social preferences". We...

JEL#: A12, B49, C70, D11, D60, D74, D91, E21<BR> Keywords: choice, naivete, partial naivete, present-biased preferences, procrastination, self control, sophistication, time inconsistency<BR> Recent models of procrastination due to self-control problems assume that a procrastinator considers just one...

JEL#: A12, A13, B49, C70, D63<BR> Keywords: Bargaining, Efficiency, Fairness, Inefficiency, Inequality, Ultimatum Game<BR> Experiments with the ultimatum game--where one party can make a take-it-or-leave-it offer to a second party on how to split a pie--illustrate that conventional game theory has been...

JEL#: B49<BR> Keywords: Bayesian Inference, the gambler' fallacy, law of large numbers, law of small numbers, over-inference<BR> Many people believe in the "Law of Small Numbers," exaggerating the degree to which a small sample resembles the population from which it is drawn. To model this, I assume...

This paper explores some of the ways that economists can incorporate insights from recent research combining psychology and economics to help understand risky behavior by adolescents.<BR> June 2000<BR> 1 <A HREF="econ/E00-285_fig.pdf">Figure .pdf</A><BR>

JEL#: A12, B49, D11, D91, E21<BR> Keywords: Addiction, consumption, cooling off, misprediction, projection bias, reference dependence<BR> People underappreciate how their own behavior and exogenous factors affect their future utility, and thus exaggerate the degree to which their future preferences...

Argentina's money and banking system was hit hard by the Great Depression. The banking sector was awash with bad assets that built up in the 1920s. Gold convertibility was suspended in December 1929, even before the crisis seriously damaged the core economies. Commonly, these events are seen as...

The central claim in this paper is that by explicitly introducing costs of international trade (narrowly, transport costs but more broadly, tariffs, nontariff barriers and other trade costs), one can go far toward explaining a great number of the main empirical puzzles that international...