The objective of this paper is to combine a real options framework with portfolio optimization techniques and to apply this new framework to investments in the electricity sector. In particular, a real options model is used to assess the adoption decision of particular technologies under...

The endowment effect, status quo bias, and loss aversion are robust and well documented results from experimental psychology. They introduce a wedge between the prices at which one is willing to sell or buy a good. The objective of this paper is to address this wedge. We show that the presence...

The standard literature on working time has modelled the decisions of firms in a deterministic framework in which firms can choose between employment and overtime (given mandated standard hours). Contrary to this approach, we follow the real options approach, which allows us to investigate the...

This paper analyzes how the statistical properties of a risk affect the attitutde of individuals towards accepting another independent risk. We conduct the analysis for the class of increasing utility functions having all their derivatives with alternating sign.

Economists have debated whether and why the designated hitter (DH) rule in North American major league baseball led to an increase in hit-batsmen. We use data from Japan's professional baseball leagues, the Pacific League (DH rule) and the Central League (no DH rule), to re-examine this...

There are two varieties of timing games in economics: Having more predecessors helps in a war of attrition and hurts in a pre-emption game. This paper introduces and explores a spanning class with rank-order payoffs} that subsumes both as special cases. We assume a continuous time setting with...

This paper defines an equilibrium concept for general preferences in two person normal form games. It collapses to Nash Equilibrium when preferences are represented by the expected utility model. An important characteristic of the equilibrium concept is that player i does not necessarily know...

We studied the decision making process in the Dictator Game and showed that decisions are the result of a two-step process. In a first step, decision makers generate an automatic, intuitive proposal. Given sufficient motivation and cognitive resources, they adjust this in a second, more...

This paper proposes an exploration of the methodology of utility functions that distinguishes interpretation from representation. While representation univocally assigns numbers to the entities of the domain of utility functions, interpretation relates these entities with empirically observable...