In this paper, we show that considering the classic Allingham and Sandmo (1972) tax compliance problem under Rank-Dependent Expected Utility (RDEU) axiomatics provides a simple explanation for the "excess" level of full compliance observed in empirical studies, and which standard Expected...

This paper merges the non-expected utility approach (Tversky and Kahneman, J Risk Uncertain 5:297–323, <CitationRef CitationID="CR17">1992</CitationRef> and Quiggin, J Econ Behav Organ 3:323–343, <CitationRef CitationID="CR14">1982</CitationRef>) into Akerlof’s (Quart J Econ 84:488–500, <CitationRef CitationID="CR2">1970</CitationRef>) model of Market for Lemons. We derive the results for different probability...</citationref></citationref></citationref>

In their celebrated contribution on credit rationing, Stiglitz and Weiss (1981) showed that the expected return to the borrower on a loan is increasing in the risk of the project it funds. In this paper, I show that their results do not necessarily carry over to the case where the agents’...

A well-known result in the medical insurance literature is that zero co-insurance is never second-best for insurance contracts subject to moral hazard. We replace the usual expected utility assumption with a version of the rank-dependent utility (RDU) model that has greater experimental support....

This paper proposes a two-step method to successively elicit utility functions and decision weights under rank-dependent expected utility theory and its "more descriptive" version: cumulative prospect theory. The novelty of the method is that it is parameter-free, and thus elicits the whole...

Pursuing our previous work in which the classical notion of increasing convex stochastic dominance relation with respect to a probability has been extended to the case of a normalised monotone (but not necessarily additive) set function also called a capacity, the present paper gives a...

This paper re-examines the rank-dependent expected utility theory. Firstly, we follow Quiggin's assumption (Quiggin 1982) to deduce the rank-dependent expected utility formula over lotteries and hence extend it to the case of general random variables. Secondly, we utilize the distortion function...

This paper studies monotone risk aversion, the aversion to monotone, meanpreserving increase in risk (Quiggin [21]), in the Rank Dependent Expected Utility (RDEU) model. This model replaces expected utility by another functional, characterized by twofunctions, a utility function u in conjunction...

This article presents various notions of risk generated by the intuitively appealing single-crossing operations between distribution functions. These stochastic orders, Bickel & Lehmann dispersion or (its equal-mean version) Quiggin's monotone mean-preserving increase in risk and Jewitt's...

Elicitation methods in decision-making under risk allow us to infer the utilities of outcomes as well as the probability weights from the observed preferences of an individual. An optimally efficient elicitation method is proposed, which takes the inevitable distortion of preferences by random...