Dictators tend to reduce the allocation amount in the experimental risky dictator game in which recipients gain the allocation probabilistically compared with the baseline dictator game. This could be attributed to probabilistic determination and social image. We conducted a series of...

This study considers the optimal demand for insurance in the presence of state-dependent background uncertainty. Its uncertainty depends on the states that are clarified by the loss occurrence, which are called the loss state and no-loss state. First, we consider a situation in which the...

This paper treats risky investment projects under adverse selection and considers optimal penalties for erroneous auditing reports that maximize social welfare. These penalties give firms an incentive to choose accounting policies that maximize social welfare. We characterize the optimal...

This paper examines the standard static portfolio problem and asset pricing under the Knightian uncertainty or ambiguity. Each investor’s preference is represented by the expected utility with uncertainty probability (EUUP) of Izhakian (2017). First, We show the threshold of an...