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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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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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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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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
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Rank dependent utility, tax evasion and labor supply
Eide, Erling; Simson, Kristine von; Strøm, Steinar - 2010
payers act according to some non-expected utility theory, and (2) Individual ethical norms and social stigma induce people … subjective probabilities of being penalised according to the rank dependent utility theory, and (2) Tax payers' beliefs about … utility theory. The model explains data 53% better than pure random choices and predicts hours worked in the regular economy …
Persistent link: https://www.econbiz.de/10008697806
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Once upon a time preference : how rationality and risk aversion change the rationale for discounting
Traeger, Christian - 2012
The paper develops an axiomatic framework for rational decision making. The von Neumann-Morgenstern axioms give rise to a richer risk attitude than that captured in the standard discounted expected utility model. I derive three models that permit a more comprehensive risk evaluation. These...
Persistent link: https://www.econbiz.de/10009533970
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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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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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When is ambiguity-attitude constant?
Eichberger, Jürgen; Grant, Simon; Kelsey, David - 2012
This paper studies how updating affects ambiguity-attitude. In particular we focus on the generalized Bayesian update of the Jaffray-Phillipe sub-class of Choquet Expected Utility preferences. We find conditions for ambiguity-attitude to be the same before and after updating. A necessary and...
Persistent link: https://www.econbiz.de/10009514770
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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