This study investigates whether the willingness to take income risks revealed by occupational choice is transmitted from parents to their children. Using data from the German Socio-Economic Panel (SOEP), we find that fathers' riskiness of job is a significant determinant of children's...

The paper revisits the impact of uncertainty on the decision problem of a bank. The bank extends risky loans to private investors and sells deposits to savers at fixed rates. The uncertainty under which deposit/loan-portfolios are chosen by banks is endogenized through an information system that...

We test whether social reference points impact individual risk taking. In a laboratory experiment, decision makers observe the earnings of a peer subject before making a risky choice. We exogenously manipulate the peer earnings across two treatments. We find a significant treatment effect on...

This paper analyses empirically and theoretically the effects of uncertainty shocks on sovereign default risk. It describes a novel mechanism for non-fundamental debt crises induced by uncertainty shocks that are defined as time-varying levels of ambiguity surrounding the macroeconomic...

This paper provides a comprehensive analysis regarding strategic interaction under expectation-based loss-aversion. First, we develop a coherent framework for the analysis by extending the equilibrium concepts of K szegi and Rabin (2006, 2007) to strategic interaction and demonstrate how to...

In this paper I analyze the attractiveness of a rank-order tournament if both market sides, employers and workers, can choose between several payment systems. I consider the self-selection of workers into different payment schemes, their effort provisions and the payment system choices of...

Insurance contract nonperformance relates to situations when valid claims are not paid by the insurer. We extend probabilistic insurance models to allow for such nonperformance risk as well as ambiguity regarding nonperformance and loss probabilities. We empirically test theoretical predictions...

We study cross-risk preferences over wealth and two other attributes to obtain theory-free evidence on correlation aversion as well as higher-order cross-traits like cross-prudence and cross-temperance. Two experiments elicit the dependence structure of risk preferences between wealth and,...

I revisit the consumption discount rate for a novel combination of standard assumptions. To disentangle risk and time preferences, I consider a decision maker with recursive preferences la Kreps and Porteus (1978). Moreover I assume that preferences are mutually utility independent in the sense...

The probability triangle (also called the Marschak-Machina triangle) allows for compact and intuitive depictions of risk preferences. Here, we develop an analogous tool for choice under uncertainty – the ambiguity triangle – and show that indifference curves in this triangle capture...