This article reports a study that tests whether the internal consistency of the standard gamble can be improved upon by incorporating loss weighting and probability transformation parameters in the standard gamble valuation procedure. Five alternatives to the standard EU formulation are...

We study a very general setting, and propose a procedure for estimating the critical values of the extended Kolmogorov-Smirnov tests of First and Second Order Stochastic Dominance due to McFadden (1989) in the general k-prospect case. We allow for the observations to be generally serially...

There is a duality theory connecting certain stochastic orderings between cumulative distribution functions F1 , F2 and stochastic orderings between their inverses F −1 , F −1. This underlies some theories of utility in the case of the cdf and deprivation indices in the case of the inverse....

In normative public economics it is crucial to know how fast the marginal utility of income declines as income increases. One needs this parameter for cost-benefit analysis, for optimal taxation and for the (Atkinson) measurement of inequality. We estimate this parameter using four large...

Are individuals more sensitive to losses than gains in macroeconomic growth? Using subjective well-being measures across three large data sets, we observe an asymmetry in the way positive and negative economic growth are experienced, with losses having more than twice as much impact on...

This paper seeks to contribute to the literature on downward nominal wage rigidity (DNWR) along two dimensions. First, we formulate and solve an explicit model of wage-setting in the presence of worker resistance to nominal wage cuts - something that has previously been considered intractable....

While instructional time is viewed as crucial to learning, little is known about the effectiveness of reducing absences relative to increasing the number of school days. In this regard, this paper jointly estimates the effect of absences and length of the school calendar on test score...

Empirically, labor contracts that financially penalize failure induce higher effort provision than economically identical contracts presented as paying a bonus for success, an effect attributed to loss aversion. This is puzzling, as penalties are infrequently used in practice. The most obvious...

Higher income is associated with greater well-being, but do income gains and losses impact on well-being differently? Loss aversion, whereby losses loom larger than gains, is typically examined with relation to decisions about anticipated outcomes. Here, using subjective well-being data from...

Many firms encourage employees to own company stock through share plans that subsidizethe price at favorable rates, but even so many employees do not buy shares. Using a newsurvey of employees in a multinational with a share ownership plan, we find considerablevariation in joining among...