Let X1,X2,… be independent random variables observed sequentially and such that X1,…,Xθ−1 have a common probability density p0, while Xθ,Xθ+1,… are all distributed according to p1≠p0. It is assumed that p0 and p1 are known, but the time change θ∈Z+ is unknown and the goal is to...

The psychological basis for rank-dependent probability weighting, and for an inverse-S probability weighting function (PWF) in particular, has often been questioned. I examine the existence and shape of the PWF in a model allowing for optimism/pessimism over probability distributions and for...

Was in Märkten sich künftig ereignen wird, kann man nicht wissen, nur erwarten. Was man erwartet, wird in der Ökonomik probabilistisch eingearbeitet: als Risikoentscheidungen. Elena Esposito zufolge besteht unter Ökonomen aber ein fundamentales Missverständnis bezüglich der...

Humans are notoriously bad at understanding probabilities, exhibiting a host of biases and distortions that are context dependent. This has serious consequences on how we assess risks and make decisions. Several theories have been developed to replace the normative rational expectation theory at...