Showing 1 - 7 of 7
One plausible mechanism through which financial market shocks may propagate across countries is through the impact that past gains and losses may have on investors' risk aversion and behavior. This paper presents a stylized model illustrating how heterogeneous changes in investors' risk aversion...
Persistent link: https://www.econbiz.de/10010851351
In this paper we propose the infimum of the Arrow-Pratt index of absolute risk aversion as a measure of global risk aversion of a utility function. We show that, for any given arbitrary pair of distributions, there exists a threshold level of global risk aversion such that all increasing...
Persistent link: https://www.econbiz.de/10010851410
We analyze the use of discrete choice models for the estimation of risk aversion and show a fundamental flaw in the standard random utility model which is commonly used in the literature. Specifically, we find that given two gambles, the probability of selecting the riskier gamble may be larger...
Persistent link: https://www.econbiz.de/10011253110
This paper aims at assessing the optimal behavior of a firm facing stochastic costs of production. In an imperfectly competitive setting, we evaluate to what extent a firm may decide to locate part of its production in other markets different from which it is actually settled. This decision is...
Persistent link: https://www.econbiz.de/10010547087
What determines risk attraction or aversion? We experimentally examine three factors: the gain-loss dichotomy, the probabilities (0.2 vs. 0.8), and the money at risk (7 amounts). We find that, for both gains and losses and for low and high probabilities, the majority display risk attraction for...
Persistent link: https://www.econbiz.de/10010547141
Are poor people more or less likely to take money risks than wealthy folks? We find that risk attraction is more prevalent among the wealthy when the amounts of money at risk are small (not surprising, since ten dollars is a smaller amount for a wealthy person than for a poor one), but,...
Persistent link: https://www.econbiz.de/10010547142
We experimentally investigate in the laboratory two prominent mechanisms that are employed in school choice programs to assign students to public schools. We study how individual behavior is influenced by preference intensities and risk aversion. Our main results show that (a) the GaleShapley...
Persistent link: https://www.econbiz.de/10011132915