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Expectations Uncertainty and Household Economic Behavior

Ben-David, Itzhak - 2018

We show that there exists significant heterogeneity across US households in how uncertain they are in their expectations regarding personal and macroeconomic outcomes, and that uncertainty in expectations predicts households' choices. Individuals with lower income or education, more precarious...

Persistent link: https://www.econbiz.de/10012480987

Salience Theory of Choice Under Risk

Bordalo, Pedro - 2010

We present a theory of choice among lotteries in which the decision maker's attention is drawn to (precisely defined … payoffs, our model provides a novel and unified account of many empirical phenomena, including frequent risk-seeking behavior … distinguish it from Prospect Theory, which we test. We also use the model to modify the standard asset pricing framework, and use …

Persistent link: https://www.econbiz.de/10012462269

Long-Run Risks and Financial Markets

Bansal, Ravi - 2007

account for the risk premia and asset price fluctuations. In addition, the model can empirically account for the cross …

Persistent link: https://www.econbiz.de/10012465457

Beliefs, Doubts and Learning : Valuing Economic Risk

Hansen, Lars Peter - 2007

decision theory to characterize when learning or discriminating among competing probability models is challenging. I also use … choice theory under uncertainty to explore the ramifications of model uncertainty and learning in environments in which … underpinnings of asset pricing models. I illustrate how statistical ambiguity can alter the risk-return tradeoff familiar from asset …

Persistent link: https://www.econbiz.de/10012465708

Self-Fulfilling Risk Panics : An Expected Utility Framework

Benhabib, Jess - 2020

Even if an asset has no fundamental uncertainty with a constant dividend process, a stochastic sentiment-driven equilibrium for the asset price exists besides the well-known fundamental equilibrium. Our paper constructs such sentiment-driven equilibria under general utility functions within an...

Persistent link: https://www.econbiz.de/10012482502

Structural Uncertainty and the Value of Statistical Life in the Economics of Catastrophic Climate Change

Weitzman, Martin L. - 2007

Using climate change as a prototype motivating example, this paper analyzes the implications of structural uncertainty for the economics of low-probability high-impact catastrophes. The paper shows that having an uncertain multiplicative parameter, which scales or amplifies exogenous shocks and...

Persistent link: https://www.econbiz.de/10012465156

Subways, Strikes, and Slowdowns : The Impacts of Public Transit on Traffic Congestion

Anderson, Michael L. - 2013

Public transit accounts for only 1% of U.S. passenger miles traveled but nevertheless attracts strong public support. Using a simple choice model, we predict that transit riders are likely to be individuals who commute along routes with the most severe roadway delays. These individuals' choices...

Persistent link: https://www.econbiz.de/10012459904

A Tale of Two Tails : Commuting and the Fuel Price Response in Driving

Gillingham, Kenneth - 2016

The consumer price responsiveness of driving demand is central to the welfare consequences of fuel price changes. This study uses rich data covering the entire population of vehicles and consumers in Denmark to find a medium-run price elasticity of driving of -0.30. We uncover an important...

Persistent link: https://www.econbiz.de/10012455743

Do Mood Swings Drive Business Cycles and is it Rational?

Beaudry, Paul - 2011

This paper provides new evidence in support of the idea that bouts of optimism and pessimism drive much of US business cycles. In particular, we begin by using sign-restriction based identification schemes to isolate innovations in optimism or pessimism and we document the extent to which such...

Persistent link: https://www.econbiz.de/10012461007

Risk Response in Agriculture

LaFrance, Jeffrey - 2011

life-cycle model for agricultural producers facing output and output price risk, with investment in an off …-farm, conditionally risk free asset, risky financial assets, savings, consumption, and agricultural production opportunities. This …

Persistent link: https://www.econbiz.de/10012461941