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Booms, recessions and financial turmoil : a fresh look at investment decisions under cyclical uncertainty

Chen, Yu-Fu; Funke, Michael - In: Scottish journal of political economy : the journal of … 57 (2010) 3, pp. 290-317

Persistent link: https://www.econbiz.de/10003971036

The firm under uncertainty : capital structure and background risk

Broll, Udo; Wong, Keith K.P. - 2010

This paper examines the interplay between the real and financial decisions of the competitive firm under output price uncertainty. The firm faces additional sources of uncertainty that are aggregated into a background risk. We show that the firm always chooses its optimal debt-equity ratio to...

Persistent link: https://www.econbiz.de/10003971039

Prospect theory and hedging risks

Broll, Udo; Egozcue, Martín; Wong, Wing Keung; … - 2010

The prospect theory is one of the most popular decision-making theories. It is based on the S-shaped utility function …, unlike the von Neumann and Morgenstern (NM) theory, which is based on the concave utility function. The S-shape brings in … mathematical challenges: simple extensions and generalizations of NM theory into the prospect theory cannot be frequently achieved …

Persistent link: https://www.econbiz.de/10003980000

A variation on Ellsberg

Eliaz, Kfir; Ortoleva, Pietro - 2011

Ellsberg's experiment involved a gamble with no ambiguity (N) and a gamble where the prize that could be won is objectively known, but the winning probability depends on the (ambiguous) urn's composition (P). We extend this by including a gamble where the winning probability is objectively...

Persistent link: https://www.econbiz.de/10008908886

Intertemporal equilibria with knightian uncertainty

Dana, Rose-Anne; Riedel, Frank - 2010

; General Equilibrium Theory ; No Trade …

Persistent link: https://www.econbiz.de/10008736535

The first shall be last : serial position effects in the case contestants evaluate each other

Haigner, Stefan; Jenewein, Stefan; Müller, Hans Christian - 2010

We analyze competitions where the contestants evaluate each other and find the first contestant to be disadvantaged. We suspect that this is due to information diffusion, Bayesian belief updating taking place in course of the contest and initial uncertainty about a contestant's relative quality....

Persistent link: https://www.econbiz.de/10008773259

"Reverse Bayesianism" : a choice-based theory of growing awareness

Karni, Edi; Vierø, Marie-Louise - 2010

This paper invokes the axiomatic approach to explore the notion of growing awareness in the context of decision making under uncertainty. It introduces a new approach to modeling the expanding universe of a decision maker in the wake of becoming aware of new consequences, new acts, and new links...

Persistent link: https://www.econbiz.de/10008824907

Ambiguity and social interaction

Eichberger, Jürgen; Kelsey, David; Schipper, Burkhard - 2007

We present a non-technical account of ambiguity in strategic games and show how it may be applied to economics and social sciences. Optimistic and pessimistic responses to ambiguity are formally modelled. We show that pessimism has the effect of increasing (decreasing) equilibrium prices under...

Persistent link: https://www.econbiz.de/10003592769

Ambiguity

Eichberger, Jürgen - 2007 - This version: July 2, 2007

Ambiguity refers to a decision situation under uncertainty when there is incomplete information about the likelihood of events. Different formal models of this notion have been developed with differing implications about the representation of ambiguity and ambiguity aversion.

Persistent link: https://www.econbiz.de/10003592835

Environmental policy à la carte : letting firms choose their regulation

Krysiak, Frank C. (contributor); … - 2008

Environmental policy often has to be devised under informational constraints, like uncertainty and asymmetric information. We consider an environmental policy that aims at reducing the welfare losses caused by asymmetric information while being sufficiently simple for implementation. In this...

Persistent link: https://www.econbiz.de/10003667308