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Differential Games of Public Investment : Markovian Best Responses in the General Case

Jaakkola, Niko; Wagener, Florian - 2023

We define a differential game of public investment with a discontinuous Markovian strategy space. The best response correspondence for the game is well-behaved: a best response exists and uniquely maps almost all profiles of opponents’ strategies back to the strategy space. Our chosen strategy...

Persistent link: https://www.econbiz.de/10014345885

Does Economic Policy Uncertainty Encourage Gambling? Evidence from the Chinese Welfare Lottery Market

Xu, Can; Steiner, Andreas; de Haan, Jakob - 2023

This paper investigates the effect of economic policy uncertainty (EPU) on gambling activity in China. Based on a … data on lottery sales in Chinese provinces to estimate the short- and long-run effect of EPU on gambling. Our results … suggest that EPU has a significant positive effect on gambling in the short run. In addition, we find that this positive …

Persistent link: https://www.econbiz.de/10014262034

Willingness to Accept, Willingness to Pay, and Loss Aversion

Chapman, Jonathan; Dean, Mark; Ortoleva, Pietro; … - 2023

We use four incentivized representative surveys to study the endowment effect for lotteries in 4,000 U.S. adults. We replicate the standard finding of an endowment effect–the divergence between Willingness to Accept (WTA) and Willingness to Pay (WTP), but document three new findings. First, we...

Persistent link: https://www.econbiz.de/10014290110

How changing prudence and risk aversion affect optimal saving

Bauer, Christian; Buchholz, Wolfgang - 2008

We show how optimal saving in a two-period model is affected when prudence and risk aversion of the underlying utility function change. Increasing prudence alone will induce higher savings only if, for certain combinations of the interest rate and the pure time discount rate, there is...

Persistent link: https://www.econbiz.de/10010264467

Apportioning of risks via stochastic dominance

Eeckhoudt, Louis; Schlesinger, Harris; Tsetlin, Ilia - 2008

Consider a simple two-state risk with equal probabilities for the two states. In particular, assume that the random wealth variable Xi dominates Yi via ith-order stochastic dominance for i = M,N. We show that the 50-50 lottery [XN + YM, YN + XM] dominates the lottery [XN + XM, YN + YM] via (N +...

Persistent link: https://www.econbiz.de/10010264492

Putting risk in its proper place

Eeckhoudt, Louis; Schlesinger, Harris - 2005

This paper examines preferences towards particular classes of lottery pairs. We show how concepts such as prudence and temperance can be fully characterized by a preference relation over these lotteries. If preferences are defined in an expected-utility framework with differentiable utility, the...

Persistent link: https://www.econbiz.de/10010271070

Why uncertainty matters: Discounting under intertemporal risk aversion and ambiguity

Traeger, Christian - 2012

Uncertainty has an almost negligible impact on project value in the economic standard model. I show that a comprehensive evaluation of uncertainty and uncertainty attitude changes this picture fundamentally. The analysis relies on the discount rate, which is the crucial determinant in balancing...

Persistent link: https://www.econbiz.de/10010280817

School Choice and Loss Aversion

Meisner, Vincent; von Wangenheim, Jonas - 2021

Evidence suggests that participants in direct student-proposing deferred-acceptance mechanisms (DA) play dominated strategies. To explain the data, we introduce expectation-based loss aversion into a school-choice setting and characterize choice-acclimating personal equilibria in DA. We find...

Persistent link: https://www.econbiz.de/10013310767

Loss Aversion, Risk Aversion, and the Shape of the Probability Weighting Function

Rablen, Matthew D. - 2023

Loss aversion, risk aversion, and the probability weighting function (PWF) are three central concepts in explaining decisionmaking under risk. I examine interlinkages between these concepts in a model of decisionmaking that allows for loss averse/tolerant stochastic reference dependence and...

Persistent link: https://www.econbiz.de/10014350127

Willingness to Accept, Willingness to Pay, and Loss Aversion

Chapman, Jonathan; Dean, Mark; Ortoleva, Pietro; … - 2023

We use four incentivized representative surveys to study the endowment effect for lotteries in 4,000 U.S. adults. We replicate the standard finding of an endowment effect—the divergence between Willingness to Accept (WTA) and Willingness to Pay (WTP), but document three new findings. First, we...

Persistent link: https://www.econbiz.de/10014262473

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