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Rare Disasters and Risk Sharing with Heterogeneous Beliefs
Chen, Hui - 2010
Although the threat of rare economic disasters can have large effect on asset prices, difficulty in inference regarding both their likelihood and severity provides the potential for disagreements among investors. Such disagreements lead investors to insure each other against the types of...
Persistent link: https://www.econbiz.de/10012462617
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How Much Would You Pay to Resolve Long-Run Risk?
Epstein, Larry G. - 2013
Though risk aversion and the elasticity of intertemporal substitution have been the subjects of careful scrutiny when calibrating preferences, the long-run risks literature as well as the broader literature using recursive utility to address asset pricing puzzles have ignored the full...
Persistent link: https://www.econbiz.de/10012459120
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An Empirical Assessment of Alternative Models of Risky Decision Making
Baker, Joanna R. - 1988
In this paper, we assess the degree to which four of the most commonly used models of risky decision making can explain … explain the decision-making behavior of the majority of our subjects. Surprisingly, we find that the choice behavior of the … of risky decision making …
Persistent link: https://www.econbiz.de/10012476344
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Inducing Leaders to Take Risky Decisions : Dismissal, Tenure, and Term Limits
Aghion, Philippe - 2014
In this paper we analyze the problem of whether and/or when to replace a leader (agent) when no monetary rewards are available, and it is the leader's competence rather than effort that is being evaluated. The only decisions that the leader takes over time are whether to undertake risky but...
Persistent link: https://www.econbiz.de/10012458366
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Buyout Activity : The Impact of Aggregate Discount Rates
Haddad, Valentin - 2016
Buyout booms form in response to declines in the aggregate risk premium. We document that the equity risk premium is the primary determinant of buyout activity rather than credit-specific conditions. We articulate a simple explanation for this phenomenon: a low risk premium increases the present...
Persistent link: https://www.econbiz.de/10012456263
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Delays in Claiming Social Security Benefits
Coile, Courtney - 1999
This paper focuses on Social Security benefit claiming behavior, a take-up decision that has been ignored in the …
Persistent link: https://www.econbiz.de/10012471466
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Climate Change Uncertainty Spillover in the Macroeconomy
Barnett, Michael; Brock, William A.; Hansen, Lars Peter - National Bureau of Economic Research - 2021
in the future. We appeal to decision theory under risk, model ambiguity and misspecification concerns to provide an … into a low dimensional characterization that depends on the uncertainty aversion of a decision-maker or fictitious social …
Persistent link: https://www.econbiz.de/10012599354
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Complexity and Sophistication
Carvalho, Leandro - 2019
Many financial situations present individuals with simple alternatives to solving complex problems. Are individuals sophisticated; do they know when they are better off opting out of complexity? We tested complexity's effects and evaluated sophistication in a large and diverse sample. We randomly...
Persistent link: https://www.econbiz.de/10012479984
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Salience Theory of Choice Under Risk
Bordalo, Pedro - 2010
We present a theory of choice among lotteries in which the decision maker's attention is drawn to (precisely defined …) salient payoffs. This leads the decision maker to a context-dependent representation of lotteries in which true probabilities … are replaced by decision weights distorted in favor of salient payoffs. By endogenizing decision weights as a function of …
Persistent link: https://www.econbiz.de/10012462269
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Uncertainty and Economic Activity : Evidence from Business Survey Data
Bachmann, Ruediger - 2010
What is the impact of time-varying business uncertainty on economic activity? Using partly confidential business survey data from the U.S. and Germany in structural VARs, we find that positive innovations to business uncertainty lead to prolonged declines in economic activity. In contrast, their...
Persistent link: https://www.econbiz.de/10012462513