Showing 1 - 10 of 52
(CRRA) and Constant Absolute Risk Aversion (CARA) utility specifications perform approximately equally well, with CARA … experiment to measure risk attitudes. We find robust evidence of substantial risk aversion. As an extension, we esimate the … various models using transformations of the ‘true’ probabilities to decision weights. The estimated degree of risk aversion …
Persistent link: https://www.econbiz.de/10005661826
. It then goes on to show that the standard economics problem of utility maximisation is formally equivalent to the …
Persistent link: https://www.econbiz.de/10005123507
Prominent economic theories have emphasized the role of commonly held perceptions and expectations for determining macroeconomic outcomes. A key empirical question is how such collectively held beliefs are formed. We use the FIFA World Cup 2006 as a natural experiment. We provide direct evidence...
Persistent link: https://www.econbiz.de/10005791748
Some central banks have a reputation for being secretive. A justification for this behaviour that we find in the literature is that being transparent about operations and beliefs hinders the central bank in achieving the best outcome. In other words, a central bank needs flexibility and...
Persistent link: https://www.econbiz.de/10005124006
Psychological factors, market sentiments, and shifts in beliefs are believed by many to play a nontrivial role in inducing and amplifying economic fluctuations. Yet, these forces are rarely considered in macroeconomic models. This paper provides an attempt to evaluate the empirical role of...
Persistent link: https://www.econbiz.de/10008468669
In this article we propose a two stage procedure to model demand decisions by customers who are balancing several dimensions of a product. We then test our procedure by analyzing the behavior of buyers from an Austrian price comparison site. Although in such a market a consumer will typically...
Persistent link: https://www.econbiz.de/10005504575
averse to risk and ambiguity. The evidence is largely correlational, however, leaving open the question of the direction of … causality. In this paper, we present experimental evidence of causation running from reliance on intuition to risk and ambiguity … lowers the probability of being ambiguity averse by 30 percentage points and increases risk tolerance by about 30 percent in …
Persistent link: https://www.econbiz.de/10011083555
This paper presents an overview of the application of the mathematical theory of 'high-low' search to firms' pricing and production decisions. We show how this methodology can be used to determine an optimal sequence of price-quantity decisions by a firm through time. We suppose that the firm...
Persistent link: https://www.econbiz.de/10005656333
Using a large sample of retail investors as well as experimental data we find that risk and ambiguity aversion are … positively correlated. We show the common link is decision style: intuitive thinkers tolerate more risk and ambiguity than … find that risk and ambiguity aversion vary with individual characteristics and wealth. The wealthy are less risk averse but …
Persistent link: https://www.econbiz.de/10008915807
Recent empirical work suggests a strong connection between the incentives money managers are offered and their risk … not only effort exertion but also risk taking behavior. The moral hazard problem with risk taking involves an incentive …-compatibility constraint on risk, which we characterize. We distinguish between one period and several periods. In the former case, under mild …
Persistent link: https://www.econbiz.de/10005504241