In household financial planning two types of risk are usually taken into account, that is – life-length risk and risk connected with financing. There are no research in which stochastic nature of the very financial goals is considered. Risk factors in this area may be different depending on...

Guided by evidence from eye-tracking studies of choice, pairwise comparison is assumed to be the building block of the decision-making procedure. A decision-maker with a rational preference may nevertheless consider the constituent pairwise comparisons gradually, easier comparisons preceding...

Many theoretical models of stochastic choice are characterized by availability variation. Instead, most stochastic choice datasets have information on attribute values that vary across decision problems. This paper uses attribute variation to characterize a framework that encompasses existing...

Experimental work regularly finds that individual choices are not rationalized. Nonetheless, recent work shows that data collected from many individuals can be stochastically rationalized by a distribution of well-defined preferences. We study the relationship between deterministic and...

Observing that people often use categorization to simplify choice problems and follow some search order to make a choice, we develop and axiomatize a stochastic choice model in which the decision maker first categorizes alternatives in a menu into disjoint categories, then search over categories...

This paper relates recursive utility in continuous time to its discrete-time origins and provides a rigorous and intuitive alternative to a heuristic approach presented in [Duffie, Epstein 1992], who formally define recursive utility in continuous time via backward stochastic differential...

We show that a steeply increasing workload before a deadline is compatible with time-consistent preferences. The key departure from the literature is that we consider a stochastic environment where success of effort is not guaranteed. -- Increasing Workload ; Deadline ; Stochasticity

Aphorisms that "Rising tides raise all boats" or that material advances of the rich eventually "Trickle Down" to the poor are really maxims regarding the nature of stochastic processes that underlay the income/wellbeing paths of groups of individuals. This paper looks at the implications for the...

Aphorisms that “rising tides raise all boats” or that material advances of the rich eventually “trickle down” to the poor are really maxims regarding the nature of stochastic processes that underlay the income/wellbeing paths of groups of individuals. This paper looks at the implications...