In this paper, we assess the degree to which four of the most commonly used models of risky decision making can explain … enough to approximate Kahnenman and Tversky's prospect theory and that for certain parametric values will yield the expected … explain the decision-making behavior of the majority of our subjects. Surprisingly, we find that the choice behavior of the …

Recent advances in AI represent improvements in prediction. We examine how decision-making and risk management … designed to address uncertainty. In particular, many processes are designed to enable coordinated decision-making among … strategies change when prediction improves. The adoption of AI may cause substitution away from risk management activities used …

role of secondary markets in providing opportunities for redistributing risk is made transparent and the modifications …

risk sharing. Higher uncertainty increases stock prices, risk premiums, volatility, wealth inequality and the dispersion of …I characterize a dynamic economy under general distributions of households' risk tolerance, endowments, and beliefs … consumption-share increases; (b) the wealth-share of high risk-tolerant households increases; (c) richer households' wealth …

explain a set of behavioral anomalies identified across four distinct domains of decision-making: choice under risk, choice …This paper introduces a formal definition and an experimental measurement of the concept of cognitive uncertainty …: people's subjective uncertainty about what the optimal action is. This concept allows us to bring together and partially …

shocks to aggregate uncertainty, I introduce a small, time-varying risk of economic disaster in a standard real business … risk of disaster does not affect the path of macroeconomic aggregates - a "separation theorem" between macroeconomic … variation in risk premia over time, are observationally equivalent to preference shocks. An increase in the perceived …

the present value of the flow of social benefits minus costs. But the real world is one of considerable uncertainty … discount rates that should be used to compute present values. The implications of uncertainty are complicated by the fact that … horizons. Correctly incorporating uncertainty in policy design is therefore one of the more interesting and important research …

The theoretical relationship between investment and uncertainty is ambiguous. This paper briefly surveys the insights … that theory has to offer and then runs a series of simple tests aimed at evaluating the empirical significance of various … theoretical effects. Our results from a panel of U.S. manufacturing firms indicate a negative effect of uncertainty on investment …

equilibrium model with a fund offering the risk-adjusted market portfolio (RAMP), ambiguity averse investors hold the fund and an … optimal portfolio based on only one information source (price versus private signal). Asset risk premia satisfy the CAPM with …