I solve the life-cycle portfolio allocation problem of a disappointment averse (DA) agent with labor income risk. DA preferences overweight disappointing outcomes and are consistent with behavior highlighted by the Allais paradox. I show that unlike constant relative risk aversion (CRRA)...

To estimate the monetary value of ideal financial planning advice, we address three types of benefits that planners provide: increasing wealth, preventing loss, and smoothing consumption. We discuss, then reject the possibility of using survey data to obtain valid estimates of the benefit of...

A large body of literature suggests that consumers derive utility from gains and losses relative to a reference point. This paper shows that such reference dependence can affect savings in opposite directions depending on whether people face liquidity constraints. Existing models for wealth and...

Until recently we have known little about how core decision processes change with age and how aging may impact the structure and function of corresponding ventromedial frontostriatal neural systems (Samanez-Larkin & Knutson, 2014). The chapter begins by briefly orienting the reader to...

As the global population ages, older decision makers will be required to take greater responsibility for their own physical, psychological and financial well-being. With this in mind, researchers have begun to examine the effects of ageing on decision making and associated neural circuits. A new...

Aggregate mortality risk - the risk that the mortality trend in a population changes in a nondeterministic way - and its implications for corporate decisions has recently been the subject of lively scientific discussion. We show that aggregate mortality risk is also a key determinant for...

We designed a commitment savings product for a Philippine bank and implemented it using a randomized control methodology. The savings product was intended for individuals who want to commit now to restrict access to their savings, and who were sophisticated enough to engage in such a mechanism....

This paper investigates how loss-aversion affects individuals' decisions on savings and insurance purchase. Specifically, this paper empirically tests if prospect theory's loss aversion decreases insurance demand and increases savings demand. Prospect theory predicts that boundedly rational...

This paper explores the relationship between linguistic variation and individual attitudes toward risk and uncertainty. We propose an innovative marker that classifies languages according to the number of non-indicative moods in the grammatical contexts involving uncertainty. We find that...

Experiments typically rely on small payments to incentivize participants. This works if participants view these payments as fungible with their own money, but if participants view the payments as a windfall, they may behave differently in experiments than in real life. We modify standard risky...