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The Origin of Prospect Theory, or Testing the Intuitive Statistician

Heukelom, Floris - Tinbergen Instituut - 2005

The origin of prospect theory is the desire to test the intuitive statistician in the real world. The development of this theory by the cognitive psychologists Kahneman and Tversky can be traced to the formers work in cognitive psychophysics, in which deviations from average behavior are termed...

Persistent link: https://www.econbiz.de/10011256975

A Theory of Procedurally Rational Choice: Optimization without Evaluation

Ficco, Stefano; Karamychev, Vladimir; Reeven, Peran van - Tinbergen Instituut - 2006

This paper analyses the behavior of an individual who wants to maximize his utility function, but he is not able to evaluate it. There are many ways to choose a single alternative from a given set. We show that a unique utility maximizing procedure exists. Choices induced by this optimal...

Persistent link: https://www.econbiz.de/10011255667

A Flexible Test for Present Bias and Time Preferences using Land-Lease Contracts

Gautier, Pieter A.; Vuuren, Aico van - Tinbergen Instituut - 2011

When agents have present bias, they discount more between now and thenext period than between period t ( 1) and t + 1. How fast the future discount rate (evaluated today) decays is an empirical question. Weshow that the discount function can be non-parametrically identified withcontracts that...

Persistent link: https://www.econbiz.de/10011256853

Reconciling Consumption Inequality with Income Inequality

Lepetyuk, Vadym; Stoltenberg, Christian A. - Tinbergen Instituut - 2013

their objective probabilities. For realistic values of risk aversion and of chance attitudes, the incentives for households … to share the idiosyncratic risk decrease. The latter effect endogenously amplifies the increase in consumption inequality …

Persistent link: https://www.econbiz.de/10011257548

A Comonotonic Image of Independence for Additive Risk Measures

Goovaerts, Marc J.; Kaas, Rob; Laeven, Roger J.A.; … - Tinbergen Instituut - 2004

This paper presents a new axiomatic characterization of risk measures that are additive for independent random … variables. In contrast to previous work, we include an axiom that guarantees monotonicity of the risk measure. Furthermore, the …. The risk measure characterized can be regarded as a mixed exponential premium. …

Persistent link: https://www.econbiz.de/10011256720

A Dynamic Model of Investor Decision-Making: How Adaptation to Losses affects Future Selling Decisions

Lee, Carmen; Kraeussl, Roman; Lucas, André; Paas, … - Tinbergen Instituut - 2008

We conduct an experiment to test whether the size of a loss and the time in a losing position affect investors’ adaptation to the loss situation and, subsequently, whether this adaptation affects future investment decisions. As investors adapt to losses, their neutral reference point shifts...

Persistent link: https://www.econbiz.de/10011257429

Sadder but wiser: The Effects of Affective States and Weather on Ambiguity Attitudes

Baillon, Aurélien; Koellinger, Philipp; Treffers, Theresa - Tinbergen Instituut - 2014

Many important decisions are made without precise information about the probabilities of the outcomes. In such situations, individual ambiguity attitudes influence decision making. The present study identifies affective states as a transient cause of ambiguity attitudes. We conducted two...

Persistent link: https://www.econbiz.de/10011255915

Fostering Cooperation through the Enhancement of Own Vulnerability

Kopanyi-Peuker, Anita; Offerman, Theo; Sloof, Randolph - Tinbergen Instituut - 2012

We consider the possibility that cooperation in a prisoner's dilemma is fostered by people's voluntarily enhancement of their own vulnerability. The vulnerability of a player determines the effectiveness of possible punishment by the other. In the "Gradual" mechanism, players may condition their...

Persistent link: https://www.econbiz.de/10011255969

The Value of Statistical Life in Road Safety: A Meta-Analysis

Blaeij, Arianne de; Florax, Raymond J.G.M.; Rietveld, Piet - Tinbergen Instituut - 2000

the initial level of risk to be caught up in a fatal traffic accident as well as the riskdecline implied by the research …

Persistent link: https://www.econbiz.de/10011257341

Risk and Inequality in a Social Decision Making Experiment

Rohde, Ingrid M.T.; Rohde, Kirsten I.M. - Tinbergen Instituut - 2012

individual perspective, but also from a societal one. Many increases in social risk involve a simultaneous increase in risk and … inequality. This paper presents an experiment which disentangles concerns for risk and inequality in a social risk context … terms of dispersion. We disentangle four types of dispersion: ex ante inequality, ex post inequality, individual risk, and …

Persistent link: https://www.econbiz.de/10011256490