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This paper uses data from the popular television game-show, "Deal or No Deal?", to analyse the way individuals make choices under risk. In a unique approach to the problem, I present a formal game-theoretical model of the show in which both the contestant and the banker are modelled as strategic...
Persistent link: https://www.econbiz.de/10005783833
Confirmation bias refers to cognitive errors that bias one towards one's own prior beliefs. A vast empirical literature documents its existence and psychologists identify it as one of the most problematic aspects of human reasoning. In this paper, we present three related scenarios where...
Persistent link: https://www.econbiz.de/10008506828
Experimental analyses have identified significant tendencies for individuals to follow herd decisions, a finding which has been explained using Bayesian principles of statistical inference. This paper outlines the results from a herding task designed to extend these analyses. Empirically, we...
Persistent link: https://www.econbiz.de/10008545813
uncertainty for Accelerator-Driven Subcritical Reactors (ADSRs). It shows that flexibility in the design and deployment strategy … design to modify the future development path in light of such uncertain scenarios. Uncertainty and flexibility are …
Persistent link: https://www.econbiz.de/10008490337
Latin America has recently experienced three cycles of capital inflows, the first two ending in major financial crises. The first took place between 1973 and the 1982 ‘debt-crisis’. The second took place between the 1989 ‘Brady bonds’ agreement (and the beginning of the economic reforms...
Persistent link: https://www.econbiz.de/10009399317
Capacity expansion models in the power sector were among the first applications of operations research to the industry. We introduce stochastic equilibrium versions of these models that we believe provide a relevant context for looking at the current very risky market where the power industry...
Persistent link: https://www.econbiz.de/10008642855
In a jury decision-making, individuals must compromise in order to reach a group consensus. If individuals compromise for non-rational reasons, such as a preference for conformity or due to erroneous information, then the final decision of the group may be biased. This paper presents original...
Persistent link: https://www.econbiz.de/10009024884
We study the representative consumer's risk attitude and efficient risk-sharing rules in a single-period, single-good economy in which consumers have homogeneous probabilistic beliefs but heterogeneous risk attitudes. We prove that if all consumers have convex absolute risk tolerance, so must...
Persistent link: https://www.econbiz.de/10005113739
New entrants in liberalised electricity markets which are not vertically integrated and do not operate a large and diversified portfolio of generation technologies are likely to favour technologies which offer the best prospects to manage fuel and electricity price risks through contractual...
Persistent link: https://www.econbiz.de/10005113777
Conventional one-period utility functions in economics assume that initial wealth only enters preferences through the definition of final wealth. As a consequence, those utility functions most utilised (i.e. exponential and quadratic) have implausible risk characteristics. The authors...
Persistent link: https://www.econbiz.de/10005113824