first-order approximated solution built by perturbation methods accounts for risk. We show that risk matters economically in … a real business cycle (RBC) model with habit formation and capital adjustment costs and that neglecting risk leads to … substantial pricing errors. A first-order approximation in continuous time reduces pricing errors by 90 percent relative to the …

uninsured capital income risk, and suffer from an information-processing capacity constraint. For given attention devoted to … capital income risk, we solve for the optimal consumption-saving choices and show that the expected welfare is increasing with … capacity, assuming a relative risk aversion degree larger than unity. Furthermore, we solve for attention choice and find that …

This study examines the effect of smallholder farmers' access to a formal climate risk transfer mechanism on their risk …. Results from the ESP model show that farmers who purchased WICI are less likely to be risk-averse compared with non …-purchaser farmers. Similarly, non-purchasers would have attained a significant reduction in their risk-aversion if they had taken up the …

of savings, precautionary savings, loss aversion, and risk. We provide the relevant theory, followed by empirical tests …

assumption of (intertemporal) risk neutrality reduces the growth effect in social discounting and significantly amplifies the … importance of risk and correlation. Second, debate and models largely overlook the difference in attitude with respect to risk … and with respect to non-risk uncertainty. The paper derives the resulting changes of the risk-free and the stochastic …

We propose a new measure of deviations from expected utility, given data on economic choices under risk and uncertainty … deviation (in beliefs, utility, or perceived prices) is within e of expected utility theory. The number e can then be used as a … distance to the theory. We apply our methodology to three recent large-scale experiments. Many subjects in those experiments …

Using the new macro data on risk aversion and patience by Falk et al. (2018), I show that risk aversion and patience … are related to intelligence: high-IQ populations are more patient and more risk averse than low-IQ populations. The … patient because they have long time horizons. The correlation between risk aversion and intelligence supports new micro data …

pattern of risk attitudes described by Kahneman and Tversky. In addition, we document a systematic effect of stake sizes on … the magnitude and sign of the relative risk premium, holding fixed both the probability that a lottery pays off and the … in which all departures from risk-neutral bidding are attributed to an optimal adaptation of bidding behaviour to the …

, but are, at best, weakly correlated. Third, WTA and WTP strongly relate to other aspects of risk preferences. The …