In this paper we analyze a large sample of individual responses to six lottery questions. We derive a simultaneous estimate of risk aversion and the time preference discount rate per individual. This can be done because the consumption of a large prize is smoothed over a larger time period. It...

When should retailers offer promotions with uncertain rewards? The current research investigates this question and finds there are instances when uncertain incentives may seem more attractive than their expected value. For example, a lottery between small and large rewards may even be as...

Research findings have proven that the willingness to take risks is distributed heterogeneously among individuals. In the general public, there is a widely held notion that individuals of certain nationalities tend to hold certain typical risk preferences. Furthermore, religious beliefs are...

We introduce uncertainty and risk aversion to the study of international environmental agreements. We consider a simple model with identical agents and linear payoffs. We show that a stable treaty with positive action always exists. While uncertainty lowers the actions of signatories, we find...

Applying the variance decomposition developed by Asdrubali et al. (1996), the paper explores for the first time the role and the extent of smoothing channels at a micro level using a sample of UK households. Our empirical analysis of British Household Panel Survey (BHPS) data concludes that the...

A stochastic solution is proposed for a general problem of demand for risks with both value-maximizing firms and risk averse agents. Explicit solutions are possible for both models when the interesting risk is perceived to be fairly-priced by the two decision makers