experiments. Contrary to the traditional view of expected utility theory, the choices can be explained in large part by previous … outcomes experienced during the game. Risk aversion decreases after earlier expectations have been shattered by unfavorable … outcomes or surpassed by favorable outcomes. Our results point to reference-dependent choice theories such as prospect theory …

orientated theories of decision makingunder risk (e.g. prospect theory or regret theory). We discussthe economic relevance of the …This paper experimentally investigates investment behavior.We find that global risk – i.e. risk independent of an agent …’sinvestment decision (like political risk) – substantiallydecreases investment. Also effort to obtain the capital usedfor investment …

We study the optimal taxation of risk-free and excess capital income with heterogeneous rates of return, alongside an … optimal nonlinear earnings tax. Households can hold three assets: one risk-free, one risky but diversifiable, and one a … private investment with idiosyncratic risk whose expected return differs among households. Contrary to expectations, the …