Contrary to the models of deterministic life cycle saving, we take itfor granted that uncertainty of one's future is the essential problem ofsaving decisions. However, unlike the stochastic life cycle models, we capturethis crucial uncertainty by a non-Bayesian scenario-based...

This paper analyses individual information acquisition in an ultimatum game with aprioriunknown outside options. We find that while individual play seems to accord reasonablywell with the distribution of empirical behavior, contestants seem to grossly overweighthe value of information. While...

This experimental study, first, compares the individual valuations of two risk reduction mechanisms: self-insurance and self-protection. Second, it investigates these valuations when the loss amount is ambiguous, and compare these values with valuations when loss amounts are known. results...

Parimutuel betting markets are simplified financial markets, andcan thus provide a clearer view of pricing issues which are more complicatedelsewhere. Though empirical studies generally conclude thatthe parimutuel betting markets are surprisingly efficient, it is alsofound that for horses with...

We experimentally investigate whether the satisficing approach isabsorbable, i.e., whether it still applies after participants become awareof it. In a setting where an investor decides between a riskless bondand either one or two risky assets, we familiarize participants with thesatisficing...

Least-Unmatched Price Auctions have become a popular format of TV and radio shows. Increasingly,they are also applied in internet trading. In these auctions the lowest single (unique)bid wins. We analyze the game-theoretic solution of least unmatched price auctions when prize,bidding cost and...

A deferred annuity typically includes an option-like right for thepolicyholder. At the end of the deferment period, he may either choose toreceive annuity payouts, calculated based on a mortality table agreed to atcontract inception, or receive the accumulated capital as a lump sum.Considering...

This paper argues that observations of non-stationary choice behavior need notnecessarily imply specific properties of the individual’s discount function. As weshow, the observed “anomalies” in intertemporal choice can alternatively be explained by an individual’s perception of the risk...

We prove that for any incomplete market and any concave utilityfunction the marginal propensities to consume and to save are alwayspositive. Furthermore, we introduce a class of incomplete markets thatincludes almost all well known examples of market incompleteness infinance and macroeconomics....

This paper investigates whether recourse to a consultant always enhances decision making. Advice given by a consultant changes the manager’s belief about his own decision-making ability. This change in belief alters the manager’s incentives to make a decision. Taking into account this...