Evaluating the economic behaviors in terms of psychology was considered as irrational at the beginning and this situation was rejected by also many economists. However, these approaches have been exposed to heavy criticism in recent years. Especially while explaining economic behaviors, the idea...

This paper explores the socially optimal level of insurance given that individuals are subject to behavioral biases, in particular narrow framing and loss aversion. The central issue of this normative analysis is whether or not a social welfare function (SWF) should take into consideration the...

Income comparisons are important for individual well-being. We examine the shape of the relationship between relative income and life satisfaction, and test empirically if the features of the value function of prospect theory carry on to experienced utility. We draw on a unique dataset for a...

This research examines capital income taxation for a loss averse investor under some acceptable in the literature reference levels relative to which are the changes in the level of wealth valued. Depending on the reference level, some results indicate that it could be possible for a capital...

Prior studies demonstrate that tax considerations can influence a taxpayer's investment decisions. By itself, this is not very surprising because the investment decisions in these studies resulted in either increasing or decreasing the tax refund or tax payment. The aim of the present study is...

Empirical literature on preferences for wealth taxation almost exclusively focuses on either the emotionally loaded estate tax or rather general concepts of redistributive preferences. Yet, it remains unclear whether the exceptional opposition towards the estate tax is applicable to other...

In thi s paper we examine capital income taxation of a reference dependent sufficiently loss averse investor in a two period portfolio choice model under full loss offset provisions. Capital income taxation with loss offset provisions has been found to stimulate risk taking in expected utility...

The prospect theory is one of the most popular decision-making theories. It is based on the S-shaped utility function, unlike the von Neumann and Morgenstern (NM) theory, which is based on the concave utility function. The S-shape brings in mathematical challenges: simple extensions and...

Evidence from an experiment investigating the house money effect in the context of a public goods game is reconsidered. Analysis is performed within the framework of the panel hurdle model, in which subjects are assumed to be one of two types: free-riders, and potential contributors. The effect...