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Solomonic separation: Risk decisions as productivity indicators
Miller, Nolan; Wagner, Alexander; Zeckhauser, Richard - In: Journal of Risk and Uncertainty 46 (2013) 3, pp. 265-297
A principal provides budgets to agents (e.g., divisions of a firm or the principal’s children) whose expenditures provide her benefits, either materially or because of altruism. Only agents know their potential to generate benefits. We prove that if the more “productive” agents are also...
Persistent link: https://www.econbiz.de/10010987804
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On risk aversion, classical demand theory, and KM preferences
Mirman, Leonard; Santugini, Marc - In: Journal of Risk and Uncertainty 48 (2014) 1, pp. 51-66
Building on Kihlstrom and Mirman (Journal of Economic Theory, 8(3), 361–388, <CitationRef CitationID="CR4 … relationship between changes in risk aversion and classical demand theory. We show that the effect of risk aversion on optimal …
Persistent link: https://www.econbiz.de/10010987805
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Joint measurement of risk aversion, prudence, and temperance
Ebert, Sebastian; Wiesen, Daniel - In: Journal of Risk and Uncertainty 48 (2014) 3, pp. 231-252
. In contrast to commonly used utility functions, prospect theory can predict this behavioral pattern. In our experiment …
Persistent link: https://www.econbiz.de/10010987807
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Experts in experiments
Gaudecker, Hans-Martin; Soest, Arthur; Wengström, Erik - In: Journal of Risk and Uncertainty 45 (2012) 2, pp. 159-190
An ever increasing number of experiments attempts to elicit risk preferences of a population of interest with the aim of calibrating parameters used in economic models. We are concerned with two types of selection effects, which may affect the external validity of standard experiments: Sampling...
Persistent link: https://www.econbiz.de/10010987809
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The “bomb” risk elicitation task
Crosetto, Paolo; Filippin, Antonio - In: Journal of Risk and Uncertainty 47 (2013) 1, pp. 31-65
This paper presents the Bomb Risk Elicitation Task (BRET), an intuitive procedure aimed at measuring risk attitudes. Subjects decide how many boxes to collect out of 100, one of which contains a bomb. Earnings increase linearly with the number of boxes accumulated but are zero if the bomb is...
Persistent link: https://www.econbiz.de/10010987810
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Bias and brains: Risk aversion and cognitive ability across real and hypothetical settings
Taylor, Matthew - In: Journal of Risk and Uncertainty 46 (2013) 3, pp. 299-320
I collect data on subjects’ risk attitudes using real and hypothetical risky choices. I also measure their cognitive ability using the cognitive reflective test (CRT). On average, measured risk preferences are not significantly different across real and hypothetical settings. However,...
Persistent link: https://www.econbiz.de/10010987816
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Prospect theory and the “forgotten” fourfold pattern of risk preferences
Scholten, Marc; Read, Daniel - In: Journal of Risk and Uncertainty 48 (2014) 1, pp. 67-83
risk aversion in losses. This fourfold pattern was not addressed by either version of prospect theory (Kahneman and Tversky …:297–323, <CitationRef CitationID="CR43">1992</CitationRef>). We show how prospect theory can accommodate the pattern by combining an … overweighting of low probabilities with a decreasingly elastic value function. We then examine the performance of prospect theory …
Persistent link: https://www.econbiz.de/10010987820
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Risk and choice: A research saga
Gollier, Christian; Hammitt, James; Treich, Nicolas - In: Journal of Risk and Uncertainty 47 (2013) 2, pp. 129-145
The economic theory of decision making under risk has seen remarkable advances over the 50 years since Pratt’s (1964 …
Persistent link: https://www.econbiz.de/10010987821
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The Shape of Utility Functions and Organizational Behavior
Pennings, J.M.E.; Smidts, Smidts, A. - Erasmus Research Institute of Management (ERIM), … - 2002
Based on measurements with 332 owner-managers, the global shape of the utility function (i.e., S-shaped versus concave or convex over the total range of outcomes) appears to discriminate organizational behavior. Whereas the degree of risk aversion, based on the local shape of the utility...
Persistent link: https://www.econbiz.de/10010837620
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Risk Aversion and Effort in an Incentive Pay Scheme with Multiplicative Noise: Theory and Experimental Evidence
Zubanov, Zubanov, N.V. - Erasmus Research Institute of Management (ERIM), … - 2012
The application of the classical "linear" model of incentive pay to the case when the noise is multiplicative to effort generates two predictions for a given strength of incentives: 1) more risk-averse workers will put in less effort, and 2) setting a performance target will weaken the negative...
Persistent link: https://www.econbiz.de/10010731361