A number of authors have used the concept of an optimum currency area (or OCA) index to assess the relative proximity of various pairs of economies to the ideal of an optimum currency area. Alas, a significant deficiency of this approach as used so far is that it provides no room for long-term...

This paper summarizes the major events in the recent history of modelling human decisions under risk. After presenting the basics of expected utility theory, the key pieces of evidence are described which showed that under certain circumstances, this theory is not descriptively valid. The most...

One of the two laureates of the Nobel Prize for economics in 2002 is Daniel Kahneman. After taking a brief look at Kahneman's life, the present article surveys his contributions to our understanding of three aspects of human decision making: judgment, comparison of alternatives and types of...

Transitivity and dominance are key concepts built deep into the fundaments of most economic models of decision-making. One of the arguments in favour of using the two concepts is that they are normative, i.e., symptomatic of perfect, rational decision-making. This paper describes several...

The aim of text was a presentation of brief non-mathematical basic features of individual decision-making models in contemporary economics theories. The text described models are divided into two groups: the first one is "reflection models", the second one "comparison models".

In traditional economics, buyer behaviour is usually modelled under the assumption of full information either on prices and their locations within the market or at least on the probability distribution of prices in the market. Neither of these assumptions seems appropriate in some cases such as...

This paper summarizes the major events in the recent history of modelling human decisions under risk. After presenting the basics of expected utility theory, the key pieces of evidence are described which showed that under certain circumstances, this theory is not descriptively valid. The most...

The relatively new stream of research on various types of utilities is reviewed and discussed together with some of its implications. The distinction is explained among experienced utility, remembered utility and predicted utility as three candidates for decision utility. Examples of selected...

This paper pits expected utility theory and cumulative prospect theory against each other as regards their descriptive accuracy. Some older as well as newer pieces of evidence are described which show that under certain circumstances, expected utility theory is not descriptively valid. The most...

We simulate how the probability of failure of a subsidiary and the group changes after a capital buffer is imposed on the group as a whole and/or the subsidiary. The simulation takes into account the relative sizes of the parent and the subsidiary, the parent’s share in the subsidiary, the...