Showing 1 - 10 of 182
Using a model with constant relative risk-aversion preferences, endogenous labor supply and partial insurance against … cost associated with missing insurance markets. On the other hand, greater wage dispersion presents opportunities to raise …
Persistent link: https://www.econbiz.de/10012773175
Demand for insurance can be driven by high risk aversion or high risk. We show how to separately identify risk … preferences and risk types using only choices from menus of insurance plans. Our revealed preference approach does not rely on … in insurance plans, offered separately to random cross-sections or offered as part of the same menu to one cross …
Persistent link: https://www.econbiz.de/10013010289
Can measured risk attitudes and associated structural models predict insurance demand? In an experiment (n = 1,730), we … insurance choices over different loss probabilities and prices. The insurance choices show coherence and some correlation with … various risk-attitude measures. Yet all the structural models predict insurance poorly, often less accurately than random …
Persistent link: https://www.econbiz.de/10013312498
We develop a model of political cycles driven by time-varying risk aversion. Agents choose to work in the public or private sector and to vote Democrat or Republican. In equilibrium, when risk aversion is high, agents elect Democrats—the party promising more redistribution. The model predicts...
Persistent link: https://www.econbiz.de/10012962718
Whereas attitudes towards risk are thought to play an important role in many decisions over the life-course, factors that affect those attitudes are not fully understood. Using longitudinal survey data collected in Mexico before and during the Mexican war on drugs, we investigate how an...
Persistent link: https://www.econbiz.de/10012962720
, survival ambiguity is welfare improving because it allows competitive insurance companies to pool risk across survival types …
Persistent link: https://www.econbiz.de/10012950059
We introduce a simple, easy to implement instrument for jointly eliciting risk and ambiguity attitudes. Using this instrument, we structurally estimate a two-parameter model of preferences. Our findings indicate that ambiguity aversion is significantly overstated when risk neutrality is assumed....
Persistent link: https://www.econbiz.de/10013027263
This paper uses the information contained in the joint dynamics of government's debt maturity choices and interest rate spreads to quantify the importance of self-fulfilling expectations in sovereign bond markets. We consider a model of sovereign borrowing featuring endogenous debt maturity,...
Persistent link: https://www.econbiz.de/10012982024
Observed choices between risky lotteries are difficult to reconcile with expected utility maximization, both because subjects appear to be too risk averse with regard to small gambles for this to be explained by diminishing marginal utility of wealth, as stressed by Rabin (2000), and because...
Persistent link: https://www.econbiz.de/10012911706
Motivated by the recent rise of populism in western democracies, we develop a tractable equilibrium model in which a populist backlash emerges endogenously in a strong economy. In the model, voters dislike inequality, especially the high consumption of "elites." Economic growth exacerbates...
Persistent link: https://www.econbiz.de/10012912539