This paper reviews some of the recent developments in the theory of decision making under risk and apply them to selected problems in the theory of optimal insurance, namely, the choice of optimal insurance coverage, and the comparative statics analysis of the optimal insurance coverage with...

This paper explores two axiomatic structures of subjective expected utility assuming a finite state-space and state-dependent, connected, topological outcome-spaces. Building on the work of Karni and Schmeidler (1981) the analytical framework includes, in addition to the preference relation on...

Using a game-theoretic approach, the authors examine possible equilibrium explanations of the often-observed phenomenon that two neighboring restaurants offering similar menus nevertheless experience vastly different demands. The essential aspect of this analysis is the presence of a consumption...