The precautionary principle (PP) applied to environmental policy stipulates that, in the presence of physical uncertainty, society must take robust preventive action to guard against worst-case outcomes. It follows that the higher the degree of uncertainty, the more aggressive this preventive...

Following the real option literature, whether or not uncertainty shocks drive business cycles depends on the degree of adjustment frictions. The more plants freeze and remain inactive in response to increased uncertainty, the stronger the adverse effects on the economic activity. Using quarterly...

Entry decisions in market entry games usually depend on the belief about how many others are entering the market, the belief about the own rank in a real effort task, and subjects' risk preferences. In this paper I am able to replicate these basic results and examine two further dimensions: (i)...

This paper uses inter-country panel data obtained during the period 1990-2010 to examine how the occurrence of natural disasters has affected corruption within the public sector. There are a number of new findings from this study. (1) Disaster with the large amount of damage increase corruption...

In this paper we propose a new measure of vulnerability called vulnerability to downside risk. The relevant benchmark for this new measure is the current level of wellbeing of a household as opposed to another benchmark such as the poverty line. We argue that this measure adds complementary...

In this paper we propose an approach to vulnerability called perceived vulnerability to downside risk. We argue that the other concepts of vulnerability, though partially adhering to the focus axiom, do not exclusively consider downside risks in their measures. The reason for this is that most...

Existing research has demonstrated carryover effects whereby emotions generated in one context influence decisions in other, unrelated ones. We examine the carryover effect in relation to valuations of risky and ambiguous lotteries with a novel focus on the comparison of carryovers arising from...

Does exposure to cognitive load affect key properties of economic behavior? In this experiment, subjects face a series of simple binary decision tasks between prospects, testing for monotonicity in monetary payments, consistency with (first-order) stochastic dominance, reduction of compound...

We report the evidence of a multi-stage lab experiment on individual decision making under ambiguity, where the latter is characterized by the (partial or) absence of information on some monetary values in the support of the lottery distributions. This complements the standard treatment of...

Which role do individual income prospects play in the decision to be an entrepreneur rather than an employee? In a model of occupational choice, higher expected after-tax earnings attract people to self-employment, while more risky net earnings deter risk-averse individuals. In this paper I...