We consider a model of affective decision making in the state preference model of uncertainty, where we prove that affective choice is testable in insurance markets and complete financial markets. Moreover we extend these results to equilibrium models of mutual insurance and an interesting class...

This paper suggests incorporating affective considerations into decision making theory and insurance decision in particular. I describe a decision maker with two internal accounts - the rational account and the mental account. The rational account decides on insurance to maximize expected...

A common stochastic restriction in econometric models separable in the latent variables is the assumption of stochastic independence between the unobserved and observed exogenous variables. Both simple and composite tests of this assumption are derived from properties of independence empirical...

We show that a demand function is derived from maximizing a quasilinear utility function subject to a budget constraint if and only if the demand function is cyclically monotone. On finite data sets consisting of pairs of market prices and consumption vectors, this result is equivalent to a...