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Risk aversion and the subjective time discount rate : a joint approach
Praag, Bernard M. S. van; Booij, Adam S. - 2003
In this paper we analyze a large sample of individual responses to six lottery questions. We derive a simultaneous estimate of risk aversion and the time preference discount rate per individual. This can be done because the consumption of a large prize is smoothed over a larger time period. It...
Persistent link: https://www.econbiz.de/10011507761
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Preferences over time and under uncertainty : theoretical foundations
Al-Nowaihi, Ali; Dhami, Sanjit S. - 2021
We formulate a general theory of preferences over outcome-time-probability triplets and decompose uncertainty into risk …
Persistent link: https://www.econbiz.de/10012599133
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Approximate expected utility rationalization
Echenique, Federico; Imai, Taisuke; Saito, Kota - 2018
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 …
Persistent link: https://www.econbiz.de/10011931433
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The dead-anyway effect revis(it)ed
Breyer, Friedrich; Felder, Stefan - 2002
In the expected-utility theory of the monetary value of a statistical life, the so-called dead-anyway effect discovered …
Persistent link: https://www.econbiz.de/10011514002
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Weber's law and the biological evolution of risk preferences : the selective dominance of the logarithmic utility function
Sinn, Hans-Werner - 2002
The paper offers a proof that expected utility maximisation with logarithmic utility is a dominant preference in the biological selection process in the sense that a population following any other preference for decision-making under risk will, with a probability that approaches certainty,...
Persistent link: https://www.econbiz.de/10011541191
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Collective risk-taking decisions with heterogeneous beliefs
Gollier, Christian - 2003
Suppose that a group of agents having divergent expectations can share risks efficiently. We examine how this group should behave collectively to manage these risks. We show that the beliefs of the representative agent is in general a function of the group.s wealth level, or equivalently, that...
Persistent link: https://www.econbiz.de/10011507677
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Efficiency, equity, and generalized lorenz dominance
Kleiber, Christian; Kraemer, Walter - 2000
We decompose the generalized Lorenz order into a size and a distribution component. The former is represented by stochastic dominance, the latter by the standard Lorenz order. We show that it is always possible, given generalized Lorenz dominance between two distributions F and G, to find...
Persistent link: https://www.econbiz.de/10009781624
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Regret theory and salience theory : total strangers, distant relatives or close cousins?
Herweg, Fabian; Müller, Daniel - 2019
Two non-expected-utility-theory approaches to model decision making under risk are regret theory (Loomes and Sugden …, 1982; Bell, 1982) and salience theory (Bordalo, Gennaioli, and Shleifer, 2012). While the psychological underpinning of … theory is a special case of regret theory. Moreover, we trace out the relationship between diminishing sensitivity of the …
Persistent link: https://www.econbiz.de/10011955763
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Putting risk in its proper place
Eeckhoudt, Louis R. (contributor);  … - 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/10002757998
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How changing prudence and risk aversion affect optimal saving
Bauer, Christian (contributor);  … - 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/10003772158