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Deconstructing the Allais Paradox : The Reduction of Compound Lotteries vs. the Independence Axiom

Shechter, Steven - 2020

The literature typically attributes the Allais Paradox to a violation of the Independence Axiom. We present experimental data showing that violations of the Reduction of Compound Lotteries Axiom are significantly more problematic, and our findings are robust to both choice and pricing tasks. We...

Persistent link: https://www.econbiz.de/10012843741

Concavity, Stochastic Utility, and Risk Aversion

Jarrow, Robert A. - 2020

This paper studies the relation between concavity, stochastic or state dependent utility functions, and risk aversion. Using the common definition of risk aversion, but modified for state dependent preferences, we show that concavity does not imply risk aversion. Instead, it implies a weaker...

Persistent link: https://www.econbiz.de/10012844461

The Theory of Insurance and Gambling : Replacing Risk Preferences with Quid pro Quo

Nyman, John A. - 2021

, preferences regarding uncertainty do not motivate demand, but uncertainty allows for the augmentation of the payout compared to …

Persistent link: https://www.econbiz.de/10013231666

On the Effect of Uncertainty on Personal Vaccination Decisions

Courbage, Christophe; Peter, Richard - 2021

decision in the absence of ambiguity. We then show that uncertainty about the probability of side effects and the efficacy of … the vaccine always reduce take-up under ambiguity aversion. However, uncertainty about the underlying disease, being the … results are relevant for policy because reducing uncertainty associated with the vaccine always has the de-sired effect …

Persistent link: https://www.econbiz.de/10013231813

The Many Faces of Multivariate Risk-Taking : Risk Apportionment for Desirable and Undesirable Attributes

Peter, Richard; Rey, Béatrice - 2022

Many decisions under risk involve alternatives with multiple and possibly non-financial attributes. In this paper, we characterize risk apportionment preferences in a bivariate setting. We distinguish between desirable and undesirable attributes and show how to adapt the theory to obtain...

Persistent link: https://www.econbiz.de/10013405702

Constant relative risk aversion and form equivalence classes

Battermann, Harald L. - 1997

Persistent link: https://www.econbiz.de/10013388229

Expected Utility Without the Completeness Axiom

Dubra, Juan; Maccheroni, Fabio; Ok, Efe A. - 2003

We study axiomatically the problem of obtaining an expected utility representation for a potentially incomplete preference relation over lotteries by means of a set of von Neumann-Morgenstern utility functions. It is shown that, when the prize space is a compact metric space, a preference...

Persistent link: https://www.econbiz.de/10014076197

Ex Post Uncertainty and the Consumer Problem

Antoniadou, Elena - 2020

Wealth uncertainty may be resolved before consumption in which case consumption is optimal. But if uncertainty remains … expected utility with preferences over two goods, one of which is subject to additive ex post uncertainty. State preferences … comparative utility loss along the distribution of uncertainty and lattice theoretic properties allow us to determine how these …

Persistent link: https://www.econbiz.de/10014093348

What Folklore Tells Us About Risk and Risk Taking : Cross-Cultural Comparisons of American, German, and Chinese Proverbs

Weber, Elke U.; Hsee, Christopher K. - 2011

Two studies attempted to discriminate between a situationaleconomic and a cultural explanation for the recently reported finding that Chinese from the People's Republic of China (PRC) are more risk-seeking than Americans. Both studies compared American and Chinese proverbs related to risk and...

Persistent link: https://www.econbiz.de/10014026774

Models and Mosaics : Investigating Cross-Cultural Differences in Risk Perception and Risk Preference

Weber, Elke U.; Hsee, Christopher K. - 2011

In this article, we describe a multistudy project designed to explain observed cross-national differences in risk taking between respondents from the People's Republic of China and the United States. Using this example, we develop the following recommendations forcross-cultural investigations....

Persistent link: https://www.econbiz.de/10014026777